OpenAI just took a major step in reshaping its corporate structure and Microsoft is on board.
The AI giant announced it has reached a non-binding agreement with Microsoft to transition its for-profit arm into a public benefit corporation (PBC).
If regulators sign off, this move could open doors for OpenAI to raise more capital and, down the line, even go public.
What This Agreement Actually Means
A PBC isn’t your typical corporate model.
Unlike regular companies, a PBC is designed to balance profit-making with broader societal goals.
For OpenAI, that mission has always been about ensuring artificial intelligence benefits humanity.
Under this agreement:
- OpenAI’s nonprofit board stays in control. It will still guide the company’s direction.
- The nonprofit gets a huge stake. Board Chair Bret Taylor said the nonprofit’s stake in the new PBC could be worth over $100 billion.
- Nothing is final yet. Both companies signed a memorandum of understanding (MOU). It’s not legally binding, but it sets the expectations as they hammer out a formal contract.
Why Microsoft Still Matters Here
Microsoft has been OpenAI’s most important partner since its first investment in 2019.
Today, Microsoft has exclusive access to many of OpenAI’s models and provides the cloud infrastructure that powers ChatGPT.
But times have changed. ChatGPT has exploded into a global business, and OpenAI is no longer as dependent on one partner as it once was.
OpenAI’s moves to diversify:
- Cloud partnerships: OpenAI signed a $300 billion deal with Oracle for cloud services starting in 2027.
- Global partnerships: It’s also working with Japan’s SoftBank on the Stargate data center project.
Despite these new deals, Microsoft says it remains committed:
“OpenAI will continue to be our partner on frontier models, and we remain committed to our long-term partnership,” said Microsoft spokesperson Michael Collins.
Tensions Behind the Scenes
While the announcement looks smooth on paper, recent reports suggest negotiations weren’t exactly easy.
- Disagreements over Windsurf: Microsoft allegedly wanted control of Windsurf’s AI technology, a coding startup OpenAI had eyed for acquisition. That deal collapsed, and Windsurf talent eventually went to Google and Cognition.
- Altman’s leadership history: Don’t forget, OpenAI’s unusual governance structure once led to CEO Sam Altman being fired and rehired in 2023. That same nonprofit board remains in place today.
Musk’s Shadow Over the Deal
Elon Musk has been a constant critic of OpenAI’s for-profit pivot.
His lawsuit against the company, and its leaders, including Altman and Greg Brockman – highlights what he sees as a betrayal of its nonprofit mission.
This year, Musk even offered $97 billion to take over OpenAI. The board rejected the bid.
Ironically, under this Microsoft-backed plan, the nonprofit’s stake in OpenAI PBC would be valued at even more.
Pushback From Nonprofits
OpenAI’s transition has also raised eyebrows from other organizations.
Groups like Encode and The Midas Project argue that moving toward a for-profit model risks compromising OpenAI’s mission to develop safe AGI for everyone’s benefit.
OpenAI, however, has pushed back.
It claims these nonprofits are secretly backed by competitors, including Musk and Meta’s Mark Zuckerberg. Both groups deny the allegations.
What’s Next?
The deal still needs approval from regulators in California and Delaware before moving forward. Until then, it remains a plan on paper.
If it goes through, OpenAI will operate under a structure that allows it to attract major investment while keeping its nonprofit roots intact.
That balance could shape how the company – and perhaps the entire AI industry – evolves in the coming years.
