Microsoft and OpenAI to Renegotiate Collaboration Terms

OpenAI signed a non-binding memorandum of understanding with Microsoft to agree on new terms for their existing partnership. The new deal should help OpenAI in advancing its plans to restructure.

The companies revealed they are working to finalize contractual terms in a definitive agreement, while remaining focused on delivering the best AI tools for everyone. The announcement marks a major step forward in ongoing talks between the pair to sign a fresh deal, as OpenAI looks to overhaul its structure and establish a for-profit division to boost its access to capital and fund its development.

Under initial proposals, OpenAI planned to convert its non-profit business to become for-profit. However, the company revised the plan and stated in May that its non-profit entity would control the whole company, including a for-profit unit. Elon Musk, a cofounder of OpenAI, has criticized the restructuring plans and threatened a lawsuit.

Microsoft invested $1 billion in OpenAI in 2019 and then around $10 billion in 2023. Under the previous terms of their agreement, Microsoft had exclusive rights to sell OpenAI’s software tools and had preferred access to its technology. As OpenAI’s revenue grows into billions of dollars, it is seeking to establish more partnerships with cloud providers and operate a conventional corporate structure, helping it to grow further.