Microsoft and OpenAI announced they have signed a non-binding agreement that will allow the company to transform into a for-profit entity. This step marks a new era in one of the most notable partnerships financing the ChatGPT craze.
The parties have not yet disclosed the exact commercial terms, but the agreement is expected to be clarified soon.
OpenAI wants to transition to a more traditional corporate structure for a capital increase and a possible IPO.Microsoft invested $1 billion in OpenAI in 2019 and another $10 billion in early 2023. According to the previous agreement, Microsoft had the exclusive right to sell OpenAI software through its Azure cloud platform. However, this year OpenAI increased its independence by signing multi-billion dollar cloud deals with Oracle and Google as part of the Stargate data center project.
While OpenAI’s value has reached $500 billion in the private market, the company’s non-profit arm is planned to acquire a share of more than $100 billion. The transformation is targeted to be completed by the end of the year; otherwise, billions of dollars in funds could be at risk.
On the other hand, it is known that Microsoft wants to maintain its access to OpenAI technologies. However, the two companies also compete in consumer chatbots and enterprise AI tools.
Microsoft is also accelerating the development of its own AI models to reduce its dependence on OpenAI.
