OpenAI announced Thursday it has signed a nonbinding agreement with Microsoft, its biggest investor, to restructure its for-profit arm into a public benefit corporation (PBC). The shift, pending approval from state regulators, could allow the ChatGPT maker to raise more capital and eventually pursue a public listing.
OpenAI board chairman Bret Taylor wrote in a blog post that the nonprofit arm will remain in control of operations and hold a stake in the new PBC, valued at more than $100 billion. Terms of the agreement beyond this stake were not disclosed.
In a joint statement, Microsoft and OpenAI confirmed they had signed a memorandum of understanding (MOU) and are working toward a final binding contract.
The agreement follows months of tense negotiations between the two companies. OpenAI has sought to reduce its dependence on Microsoft, despite a cloud partnership that gives Microsoft preferred access to its technology. In the past year, OpenAI has signed major deals with Oracle and SoftBank to diversify its infrastructure.
The transition also revives debates about governance at OpenAI. The nonprofit board famously ousted and then reinstated CEO Sam Altman in 2023. Critics, including Elon Musk, argue that shifting to a PBC undermines OpenAI’s original nonprofit mission. Musk even launched a lawsuit and made a $97 billion takeover bid earlier this year, which the board rejected.
Under the new plan, the nonprofit’s stake in OpenAI’s PBC would exceed the value of Musk’s bid. Still, the transition faces regulatory scrutiny, with California and Delaware attorneys general yet to approve the move.
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