Microsoft, OpenAI Agree to Explore For-Profit Public Benefit Corporation Transition

Microsoft and OpenAI have reached a non-binding agreement to extend their partnership and support OpenAI's restructuring into a public benefit corporation (PBC), a hybrid model balancing profit and societal goals. This restructuring involves the nonprofit parent maintaining control and holding a stake potentially valued at over $100 billion, while Microsoft and the nonprofit each take about 30% ownership of the new company, with the rest allocated to staff and investors. The move aims to facilitate new capital raising opportunities and possible public listing but faces regulatory scrutiny from California and Delaware attorneys general over charitable law compliance and safety concerns, particularly regarding AI's impact on children. Elon Musk has opposed the plan, filing a lawsuit accusing OpenAI of abandoning its nonprofit mission, which OpenAI denies. Despite new global cloud partnerships with Oracle and SoftBank, Microsoft remains a key partner, retaining exclusive rights to OpenAI’s models and infrastructure under the agreement. Negotiations have been tense, including disputes over technology control and product sales, but the deal is critical for OpenAI to secure $19 billion in promised funding and continue its growth trajectory.