Microsoft and OpenAI unveil the ‘next phase’ of their alliance

Microsoft and OpenAI have officially confirmed they are entering the “next phase” of their collaboration, having signed a non-binding memorandum of understanding . While the ink is still drying and specific terms remain under wraps , The New York Times reports that the agreement focuses on how the two will distribute both technology and revenue moving forward. Perhaps most significantly, the new deal reportedly updates a crucial stipulation from their original contract: a clause that would have cut off Microsoft’s access to OpenAI’s technology once the startup’s board deemed it had reached human-level artificial general intelligence (AGI) .

According to The Times, the arrangement sees OpenAI transferring an equity stake valued at roughly $100 billion to its nonprofit entity , a move designed to preserve the organization’s oversight power. This shift clears the path for OpenAI to evolve into a public benefit corporation —a corporate structure meant to serve the greater good —and sets the stage for a future initial public offering . However, before making this leap, OpenAI had to navigate its complex relationship with Microsoft, which has poured over $13 billion into the company in exchange for a 49 percent claim on future profits .

Speculation that OpenAI might abandon its convoluted nonprofit structure began swirling last year. Following Christmas 2024 , the company officially announced its intention to reorganize as a public benefit corporation issuing ordinary shares, explaining that the move would “enable us to raise the necessary capital with conventional terms like others in this space.” Despite the corporate pivot, OpenAI emphasized in May that its governance remains unchanged. “OpenAI was founded as a nonprofit , and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit,” the company affirmed.