Microsoft and OpenAI sign deal that could smooth path to IPO

OpenAI is working on changing its structure so it can eventually become a public company. One key challenge in this process is its complicated partnership with Microsoft, which has invested heavily in OpenAI over the years. Now, both companies have taken a big step forward with a new agreement.

On Thursday, Microsoft and OpenAI said they have signed a non-binding memorandum of understanding (MOU). This means they have agreed on the direction of their future partnership, though final legal details are still being worked out. In a joint statement, both companies said they remain focused on building the best AI tools for people, with safety as their top priority.

Microsoft has invested $13 billion in OpenAI since 2019 and makes money through ChatGPT and related AI services. But the relationship between the two has changed recently. Microsoft now treats OpenAI as a competitor in certain areas, while also allowing it to use other cloud providers, not just Microsoft’s Azure. At the same time, Microsoft is investing more in developing its own AI models.

At a company meeting, Microsoft CEO Satya Nadella and AI chief Mustafa Suleyman said Microsoft would continue making “significant investments” in its own AI systems, while still using OpenAI’s models where needed.

Meanwhile, OpenAI has announced important details about its restructuring. Its nonprofit parent company will stay in control of the for-profit side and hold an equity stake worth over $100 billion. However, this unusual structure has faced criticism from other nonprofits and philanthropies. Attorneys general in California and Delaware are even investigating OpenAI’s setup.

OpenAI says it is cooperating with the investigations and working to build AI responsibly. The company reaffirmed its commitment to making AI tools that are safe, useful, and designed with industry-wide safety standards in mind.