OpenAI Restructures To A PBC Led By Its Nonprofit Foundation, Microsoft Holds 27%

After months of speculation and uncertainty, artificial intelligence (AI) sector leader OpenAI finally managed to get its plan to restructure into a for-profit company, after signing a non-binding agreement with Microsoft—its primary backer—that would allow OpenAI to transition into a for-profit business.

This would also allow the company to accept investments from other companies and partner with them for cloud computing infrastructure and other resources. Most recently, it was revealed that OpenAI was set to complete its $30 billion investment from SoftBank with the approval of the second instalment of $22.5 billion.

Now, finally, OpenAI has revealed that the move has been completed.

OpenAI said that it has signed a new definitive agreement with Microsoft that “sets the stage for long-term success for both organizations” while also strengthening its partnership.

The agreement notes that Microsoft has approved the OpenAI board’s plan to move forward with the formation of a public benefit corporation (PBC) and recapitalization. Post this recapitalization, Microsoft’s stake in the newly formed OpenAI Group PBC will be approximately $135 billion or around 27%.

These figures represent an as-converted diluted basis that’s inclusive of all owners—employees, investors, and the OpenAI Foundation. When excluding the impact that new investors had on OpenAI, Microsoft’s stake would be around 32.5%.

It drove OpenAI’s valuation to $500 billion, while Microsoft’s shares grew 4%. 

As per the agreement, OpenAI will remain Microsoft’s frontier model partner, and Microsoft will continue to have exclusive IP rights and Azure API exclusivity until Artificial General Intelligence (AGI).

It also allows each company to grow and innovate independently.

This includes changes such as: OpenAI’s AGI will be verified by an independent expert panel; it can jointly develop some products with third parties (only API products will be exclusive to Azure); it can release open weight models that meet requisite capability criteria; it can provide API access to US government national security customers through any cloud provider; it can release open weight models that meet requisite capability criteria, and more.

Meanwhile, Microsoft’s IP rights for models and products extend to 2032 and now include models post-AGI; its IP rights exclude OpenAI’s consumer hardware; its IP rights to research will remain until AGI is verified or through 2030; it can independently pursue AGI or partner with third parties, among other adjustments.

Furthermore, the revenue share agreement will remain until AGI is verified, though payments will be made over a longer period of time, and while Microsoft doesn’t have the right of first refusal to be OpenAI’s compute provider, the latter has purchased an additional $250B of Azure services.

“Since 2019, Microsoft and OpenAI have shared a vision to advance artificial intelligence responsibly and make its benefits broadly accessible,” reads the release. “What began as an investment in a research organization has grown into one of the most successful partnerships in our industry.”


While OpenAI has completed its recapitalization and simplified its corporate structure, the nonprofit will remain in control of the newly formed for-profit division, as per another official statement.

The nonprofit gets a new name though—OpenAI Foundation—and holds approximately $130 billion in equity at OpenAI Group, which makes it “one of the best resourced philanthropic organizations ever.”

The move also brings the nonprofit additional ownership as OpenAI’s for-profit reaches a valuation milestone. “The more OpenAI succeeds as a company, the more the non-profit’s equity stake will be worth, which the non-profit will use to fund its philanthropic work,” reads the release.

The OpenAI Foundation will commit $25 billion in two main focus areas—health and curing diseases and technical solutions to AI resilience.

The two will work in tandem and aim at “building safe and aligned systems, turbocharging scientific discovery, and strengthening global cooperation and resilience.”

According to Sam Altman, OpenAI is on track to build an intern-level research assistant by September 2026 and a fully automated “legitimate AI researcher” by 2028. This was seconded by OpenAI’s chief scientist, Jakub Pachocki, who clarified that this AI researcher won’t be a human who researches AI but a “system capable of autonomously delivering on larger research projects.”

“We believe that it is possible that deep learning systems are less than a decade away from superintelligence,” Pachocki added. 

Interestingly, Sam Altman will not be getting a stake in the newly restructured company.

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