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OpenAI and Microsoft are engaged in negotiations to redefine their multibillion-dollar partnership, reported Financial Times, citing sources.
The discussions aim to facilitate OpenAI's potential initial public offering (IPO) while ensuring Microsoft retains access to cutting-edge AI models.
The renegotiation is crucial for OpenAI's restructuring efforts and could shape its future trajectory in the tech industry.
A central issue in the negotiations is determining how much equity Microsoft will receive in the restructured OpenAI in exchange for its $13bn investment.
The companies are also revising a contract from 2019, which currently extends to 2030, covering Microsoft's access to OpenAI's intellectual property and revenue sharing from product sales.
According to sources familiar with the talks, Microsoft is willing to relinquish some of its equity stake in OpenAI's new for-profit business in return for access to future technologies beyond the 2030 cutoff.
The agreement is vital for OpenAI's restructuring and could influence its role in developing large language models, the backbone of technologies like ChatGPT.
OpenAI CEO Sam Altman has expressed his ambition to develop artificial general intelligence, surpassing human capabilities.
Recently, OpenAI abandoned plans to remove its non-profit board's control but retained intentions for its business arm to become a public benefit corporation, allowing for investor equity while focusing on social good.
Negotiations are complicated by a cooling relationship between OpenAI and Microsoft, though they remain close collaborators.
Microsoft integrates OpenAI's technology into its software while providing significant computing power for AI model training.
OpenAI's growing ambitions have led to increased competition with Microsoft, as it targets enterprise customers and partners with companies such as SoftBank and Oracle.
Founded in 2015 by Altman, Elon Musk, and others, OpenAI launched a for-profit subsidiary in 2019, allowing outside investment for a share of future profits.
Recent investors, including Microsoft and SoftBank, do not view their backing as a donation, highlighting the shift towards a more conventional for-profit structure.
OpenAI raised $6.6bn in October 2024 and an additional $40bn in March 2025, with provisions for equity allocation upon conversion to a public benefit corporation.
Investors can recoup their investments if OpenAI fails to restructure, though executives remain confident in their backers' commitment.
The restructuring is seen as essential for raising significant funds, with one insider noting that raising $40bn under a capped profit structure is not feasible.