Openai, Microsoft Gear Up For 'Next Phase' Of Partnership As Chatgpt Maker Nears For-Profit Conversion

OpenAI and its early backer and partner, Microsoft, said Thursday they have reached a deal to extend their partnership, in what would be a crucial step that clears the way for the ChatGPT-maker's restructuring to a for-profit entity.

In a joint statement, the companies said they are working to finalize contractual terms.

In a separate statement, OpenAI hinted that it has moved closer to a final structure. OpenAI's nonprofit firm would control a new proposed Public Benefit Corporation (PBC) and also have an over $100 billion equity stake in the PBC, OpenAI board chairman Bret Taylor said in a blog post.

A PCB is legally required to consider the impact of its decisions on society, not just shareholders, in addition to pursuing profits. The nonprofit and PCB pair would ensure that OpenAI continues to raise venture capital while also allowing states and donors oversight over its operations.

"This structure reaffirms that our core mission remains ensuring AGI benefits all of humanity. Our PBC charter and governance will establish that safety decisions must always be guided by this mission," Taylor said.

OpenAI was founded in 2015 as a nonprofit research firm and has since incorporated a for-profit subsidiary. 

OpenAI's conversion plan, first announced last year, has drawn faced resistance, including scrutiny by attorneys general in California and Delaware, as well as a lawsuit by Tesla CEO Elon Musk, an early donor to OpenAI.

Microsoft shares rose nearly 2% in premarket trading on Thursday, signaling investor relief.

Microsoft has invested about $13 billion in OpenAI, starting from 2019, and using its technology in several of its software and products has given it an early lead in AI and boosted its stock to new heights.

On Stocktwits, the retail sentiment for Microsoft was 'bearish,' and it was among the top trending tickers on the platform as of late Thursday. MSFT shares are up 19% year-to-date.

The latest announcement also comes amid reports that Microsoft is intensifying its efforts to expand its artificial intelligence capabilities and reduce its reliance on OpenAI. The software giant has reportedly struck a partnership to bring Amazon-backed Anthropic's AI models to Office 365 apps, specifically Word, Excel, Outlook, and PowerPoint.

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