OpenAI and Microsoft Rework Billion-Dollar Deal Amid IPO Plans

Yigit Taha OZTURK — Sun, 11 May 2025 17:00:28 +0000

In the high-stakes race to dominate artificial intelligence, strategic alliances matter as much as innovation. Now, two of the field’s biggest names — OpenAI and Microsoft — are redrawing the blueprint of their multibillion-dollar partnership.

According to the Financial Times, the companies are deep in negotiations to restructure their deal. This overhaul aims to prepare OpenAI for a potential initial public offering (IPO) while securing Microsoft’s long-term access to next-generation AI technologies.

Microsoft Weighs Equity Against Future AI Access

A central issue is how much equity Microsoft will receive in OpenAI’s new for-profit entity, given its $13 billion investment to date. Interestingly, Microsoft is reportedly open to giving up some of its stake in exchange for continued access to technologies developed beyond 2030.

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This rebalancing could mark a strategic shift: less equity in return for guaranteed innovation rights.

Revising the Terms of a Long-Term Alliance

Their partnership dates back to 2019, when Microsoft first invested $1 billion in OpenAI. Now, that original agreement is also on the table for revision as OpenAI seeks greater independence and a more IPO-friendly structure.

Last week, The Information reported that OpenAI plans to share a smaller portion of revenue with Microsoft under its new restructuring plans.

Meanwhile, Microsoft’s broader AI strategy includes a massive $500 billion joint venture with Oracle and SoftBank, announced in January, to build new AI data centers across the U.S.

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The post OpenAI and Microsoft Rework Billion-Dollar Deal Amid IPO Plans appeared first on Coin Engineer.

OpenAI Stays Nonprofit, Scraps Transformation Plans

Yigit Taha OZTURK — Tue, 06 May 2025 17:00:30 +0000

ChatGPT creator OpenAI has officially abandoned plans to convert into a fully for-profit company. Instead, it will remain under nonprofit control while operating through a Public Benefit Corporation (PBC) model — a for-profit structure legally bound to prioritize public benefit alongside shareholder interests.

CEO Sam Altman emphasized that this will not hinder OpenAI’s ability to raise massive funding needed for AI development. “We currently need hundreds of billions of dollars, and may eventually need trillions,” Altman wrote in a message to staff.

Profit Structure Dispute and Musk Lawsuit

Originally founded in 2015 as a nonprofit, OpenAI created a for-profit arm in 2019 to support fundraising. Despite remaining under nonprofit control, plans in 2024 hinted at a full spinout — which sparked backlash.

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One of the most vocal critics was Elon Musk, OpenAI’s co-founder, who filed a lawsuit accusing Altman of violating the charitable intentions of the original founding. Musk alleged that Altman planned all along to convert the organization into a for-profit entity.

Musk later launched xAI and developed Grok, positioning it as a rival to ChatGPT, while accusing OpenAI of anti-competitive behavior.

Massive Revenue Goals Remain

Despite the governance shift, OpenAI’s financial ambitions remain bold. According to Bloomberg, the company expects to generate $12.7 billion in 2025, growing to $29.4 billion by 2026. In March, OpenAI reportedly raised $40 billion from SoftBank, at a $300 billion valuation.