OpenAI gives MS 27% stake, wraps up for-profit shift

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

- Reuters

The deal removes a major constraint on raising capital for OpenAI that has existed since 2019, when it signed a deal with Microsoft that gave the tech giant rights over much of OpenAT'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.

CEO Sam Altman will not get equity in the restructured company, an OpenAl spokesperson said, in a reversal from discussions last year that he would receive equity. The company has no plans to focus on a potential public offering, the spokesperson said.

Microsoft will still hold a stake of about $135 billion, or 27%, in OpenAl Group PBC, which will be controlled by the OpenAI Foundation, a nonprofit, 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 10 times its investment.