OpenAI and Microsoft have reached a non-binding agreement to restructure their partnership, paving the way for the AI developer to convert its for-profit arm into a public benefit corporation (PBC). This move signifies a notable shift in the complex relationship between the two companies, as OpenAI seeks greater independence in its commercial operations while maintaining its commitment to its non-profit mission. The agreement, announced Thursday, September 11, 2025, marks the "next phase" of their partnership.
Under the agreement, Microsoft has endorsed OpenAI's transition of its capped-profit subsidiary into a PBC. In turn, OpenAI's non-profit parent is expected to receive an equity stake in the new entity worth over $100 billion. OpenAI's Chairman of the Board, Bret Taylor, stated that this equity stake would make it "one of the most well-resourced philanthropic organizations in the world". OpenAI is currently collaborating with the attorneys general of California and Delaware regarding the structure. The companies aim to finalize the conversion by the end of 2025.
For Microsoft, a long-standing partner and investor in OpenAI, this agreement represents a recalibration of its financial stake. Currently, Microsoft is entitled to approximately 20% of OpenAI's revenues through their exclusive cloud and commercial partnership. Reports suggest that OpenAI aims to reduce that share over time, potentially halving it by the end of the decade, with Microsoft compensated through equity and other rights. The restructuring aims to balance OpenAI's access to capital with its non-profit mission of ensuring AI benefits humanity. By converting its for-profit arm into a PBC, OpenAI will retain its charitable oversight while opening itself to broader investment opportunities. OpenAI stated that this new structure would allow them to secure the resources needed to scale responsibly, while keeping their founding mission at the center of their governance.
This agreement comes amidst increasing demand for advanced AI infrastructure and services. Microsoft has integrated OpenAI's models across Azure, Office, and other platforms, making it a central component of its AI strategy. However, the reshaping of commercial rights could loosen Microsoft's exclusive hold over OpenAI technology, potentially allowing other cloud providers and partners greater access. In line with this, OpenAI has recently entered into a $300 billion partnership with cloud company Oracle, and it's been collaborating with investors like Softbank to implement its nationwide Stargate data center project. Moreover, Google Cloud will also be joining forces with OpenAI for compute power.
The agreement is subject to regulatory and legal approval, with filings expected in both California and Delaware, where OpenAI entities are incorporated. Scrutiny could arise over competition and governance, particularly given Microsoft's prominent role in both funding and deploying OpenAI technologies. For now, the agreement signals a compromise between OpenAI's ambition to scale as a global AI leader and Microsoft's desire to protect its multi-billion-dollar investment.
Microsoft has invested billions of dollars in OpenAI, including $1 billion in 2019 and another $10 billion at the beginning of 2023. While Microsoft has been a crucial partner, OpenAI is seeking a more conventional corporate structure and partnerships with additional cloud providers to expand sales and secure the computing capacity needed to meet the growing demand. This move also intends to roll out a future IPO and protect its access to advanced AI models.
