Microsoft and OpenAI strike truce after months of tense negotiations

Microsoft and OpenAI say they have reached a preliminary deal to advance their collaboration, an apparent detente between the firms that could ease the startup’s path towards shifting its structure to include a for-profit corporation.

OpenAI chairman Bret Taylor said Thursday that the nonprofit will retain control of a new public benefit corporation while securing an equity stake worth at least $100 billion. He noted the stake would make the nonprofit “one of the most well-resourced philanthropic organizations in the world.”

“OpenAI started as a nonprofit, remains one today, and will continue to be one — with the nonprofit holding the authority that guides our future,” Taylor said in the statement.

Reports indicate that the $100 billion stake, which stands for about 20% of the value of OpenAI, is a floor and is prone to rise. After the announcement, Microsoft shares rose about 2.4% in extended trading.

Microsoft and OpenAI strike truce after months of tense negotiations

Microsoft and OpenAI have engaged in discussions for months about advancing their relations, partly to secure Microsoft’s assent for restructuring the startup. In return for massive financial backing, Microsoft can use OpenAI’s AI tools in its products. Microsoft’s involvement has been a key obstacle to OpenAI’s restructuring plans.

Still, Microsoft and OpenAI didn’t disclose the terms of the new contract and said that the current agreement was nonbinding. The firms noted on Thursday that they had signed a “non-binding memorandum of understanding (MOU) for the next phase of our collaboration.” They noted they are “actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety.”

This concludes a tense summer of negotiations between the two companies, which grew so strained at one point that OpenAI considered turning to antitrust regulators to exit the contract.

Nonprofit to keep control with $100B stake in new for-profit entity

A few weeks ago, Microsoft released the first of its large language models developed under Suleyman. It was trained on 15,000 Nvidia Corp. H100 chips. Cutting-edge models from Meta Platforms Inc., Alphabet Inc.’s Google, and Elon Musk’s xAI used clusters six to 10 times larger, Suleyman added, suggesting that Microsoft created its model more efficiently.

Microsoft aims to take a multimodel approach across its products, letting customers choose the AI models they prefer, CEO Satya Nadella said. Earlier this week, The Information reported that the company plans to integrate Anthropic models into some offerings.

OpenAI is finalizing the ownership structure of its planned for-profit entity, but still needs approval from regulators in California and Delaware. The company said the nonprofit will retain control and hold a stake worth over $100 billion, potentially making it one of the world’s largest philanthropies — though it remains uncertain when those funds could actually be distributed.

OpenAI is contending with a growing list of opponents actively seeking to block its restructuring effort or intervening with regulators in hopes its nonprofit mission remains intact. One of those involved is billionaire Elon Musk, Meta Platforms, and various advocacy organizations. Musk has already taken Apple and  OpenAI to court.

As earlier reported by Cryptopolitan, the lawsuit, filed in the U.S. District Court for the Northern District of Texas by Elon Musk’s AI startup xAI, follows the company’s takeover of social media platform X through a stock swap earlier this year.

Musk alleges that OpenAI is leveraging its influence to “collude” and block rivals from competing in smartphones and generative AI. His team claims Apple deliberately favors OpenAI by embedding ChatGPT into iPhones, iPads, and Macs, pushing alternatives like xAI’s Grok down App Store rankings.

According to the suit, the Apple-OpenAI partnership is structured to shut out competing super apps and AI chatbots, giving the two companies a shared edge they deny to others.

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