Microsoft, OpenAlI reach new deal valuing OpenAI at $500 bn

Microsoft and OpenAl reached adeal to allow the ChatGPT maker to restructure itself into a public benefit corporation, valuing OpenAl at $500 billion and giving it more freedom in its business operations.

- REUTERS

The deal removes a major constraint on raising capital for OpenAl that has existed since 2019, when it signed a deal with Microsoft that gave the tech giant rights over much of OpenAl’s work in exchange for costly cloud computing services needed to carry it out. As its ChatGPT service exploded in popularity, those limitations became a notable source of tension between the two companies. Microsoft will still hold a stake of about $135 billion, or 27 per cent in OpenAl Group PBC, which will be controlled by the OpenAl Foundation, anon-profit, the companies said. The Redmond, Washington-based firm has invested $13.8 billion in OpenAl, with Tuesday’s deal implying that Microsoft had generated a return of nearly ten times its investment.