OpenAI and Microsoft calm tensions and reach a non-binding agreement on transforming OpenAI into a ‘public benefit corporation’.
OpenAI and Microsoft have reached a non-binding agreement on a new phase in their collaboration. The agreement should pave the way for transforming OpenAI’s commercial branch into a public benefit corporation (PBC), which is a for-profit company that also sets social goals.
Non-profit Retains Control
According to a blog post by chairman Bret Taylor, the non-profit structure will remain and maintain control over the company. This non-profit branch would be worth more than $100 billion in the new PBC. This would allow OpenAI to “become one of the best-funded social organizations in the world”.
TechCrunch reports that the deal follows difficult negotiations. Microsoft has invested billions in OpenAI since 2019 and received exclusive cloud rights via Azure in return. Meanwhile, OpenAI is seeking more independence: it signed a mega-contract worth $300 billion with Oracle and started a data center project with SoftBank.
Additionally, Microsoft wanted to acquire Windsurf, an AI coding startup whose intellectual property OpenAI wanted to keep independent. Eventually, the deal fell through, and Windsurf was acquired by Google.
Political and Legal Pressure
The agreement still needs to be approved by regulators in California and Delaware. Meanwhile, political pressure continues. Elon Musk is suing OpenAI and previously made a failed takeover attempt worth $97 billion. Other non-profit organizations have also criticized the move, fearing that OpenAI’s mission to “develop AI for the benefit of humanity” is being undermined.
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