Microsoft Deepens OpenAI Ties with $135 Billion Stake in New PBC Structure

Microsoft  and OpenAI  have finalized a new definitive agreement that deepens their successful partnership, which began in 2019 with a shared vision for advancing artificial intelligence responsibly. This new phase strengthens their collaboration and sets the stage for long-term success, particularly as the two organizations move closer to the goal of Artificial General Intelligence (AGI).

Financial Structure and Governance Changes

The agreement confirms major changes to OpenAI’s corporate structure and Microsoft’s investment stake. Microsoft supports the OpenAI board’s decision to move forward with the formation of a Public Benefit Corporation (PBC) and recapitalization. Following this, Microsoft now holds an investment in OpenAI Group PBC valued at approximately $135 billion, representing roughly a 27 percent stake on an as-converted diluted basis. Key elements of the original partnership remain, ensuring OpenAI continues as Microsoft’s frontier model partner and Microsoft retains exclusive IP rights and Azure API exclusivity until AGI is declared.

A notable evolution in governance is that once AGI is declared by OpenAI, that declaration will now be subject to verification by an independent expert panel.

Refined IP Rights and Operational Independence

The new agreement includes several refined provisions that grant each company greater independence and extend Microsoft’s technological protections:

• Microsoft’s IP Rights are Extended: Microsoft’s IP rights for models and products are now extended through 2032 and include models developed post-AGI, all subject to appropriate safety guardrails. Its IP rights to research, defined as confidential development methods, will continue until either the AGI expert panel verification or 2030, whichever comes first.
• New Product Freedoms: OpenAI can now jointly develop some products with third parties; however, any API products developed with third parties will remain exclusive to Azure. Furthermore, Microsoft can now independently pursue AGI alone or with other third parties.
• Compute and Revenue Share: The existing revenue share agreement remains until the expert panel verifies AGI, though payments will be stretched over a longer period. Crucially, OpenAI has contracted to purchase an incremental $250 billion of Azure services, and Microsoft will no longer hold the right of first refusal to be OpenAI’s exclusive compute provider.
• Open Access and Government Access: OpenAI is now able to release open weight models that meet requisite capability criteria. Additionally, OpenAI can now provide API access to US government national security customers, regardless of the cloud provider.

This next chapter is positioned to allow both Microsoft and OpenAI to continue building advanced products, driving new opportunities for businesses globally while maintaining a robust framework for ethical and safe AI development.