Microsoft and OpenAI have agreed on new terms that could redefine the future of their partnership. The deal, announced Thursday, is non-binding but sets the stage for OpenAI to transition into a “for-profit structure” and potentially go public.
While financial details were not disclosed, the companies confirmed they are working toward a definitive contract. The move highlights OpenAI’s ambition to raise capital, expand operations, and secure enough computing power to meet surging global demand for artificial intelligence products.
Microsoft invested $1 billion in OpenAI in 2019, followed by a $10 billion infusion in early 2023. Under their earlier deal, Microsoft had exclusive rights to sell OpenAI’s software through its Azure cloud platform and enjoyed priority access to its models.
That exclusivity has since loosened. OpenAI signed $300 billion worth of long-term contracts with Oracle and struck a cloud agreement with Google. It is also developing its own massive data center project, codenamed Stargate. These moves show how OpenAI is diversifying beyond Microsoft while preparing for explosive growth.
Microsoft still has strong incentives to stay close. It depends on OpenAI’s technology to enhance its Azure cloud and power AI features like Copilot in Microsoft 365. Even if OpenAI one day announces it has reached artificial general intelligence (AGI), Microsoft wants guarantees of continued access.
Billions in Play
According to board chair Bret Taylor, OpenAI’s nonprofit arm is expected to receive more than $100 billion in value — around 20% of the company’s $500 billion private valuation. That would make it one of the most heavily funded nonprofits in the world.
But regulatory approval is critical. Attorneys general in California and Delaware must sign off on OpenAI’s restructuring. The company aims to complete the process before year’s end to avoid jeopardizing billions in tied-up funding.
What remains unclear is how much equity Microsoft will hold in OpenAI after the changes, or whether it will retain exclusive rights to any of the company’s most advanced models. Both sides appear to be balancing cooperation with competition.
Competition Heats Up
Even as partners, Microsoft and OpenAI compete in several key areas. Microsoft has invested in developing its own large language models, a strategy meant to reduce dependence on OpenAI technology. At the same time, OpenAI continues to explore partnerships with other providers to strengthen its position.
Still, both remain deeply intertwined. Microsoft benefits from OpenAI’s rapid innovation, while OpenAI relies on Microsoft’s cloud infrastructure and distribution channels. The reshaped agreement reflects the rapidly shifting AI market, where companies must adapt quickly to secure long-term dominance.
The deal represents a new chapter for two of the biggest players in artificial intelligence. Microsoft, with billions already invested, is unlikely to loosen its grip. OpenAI, seeking a more traditional corporate path, is preparing to compete and collaborate at the same time.
