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Microsoft and OpenAI signed a non-binding deal that may redefine one of the most high-profile alliances in artificial intelligence. The transaction also opens the door to an eventual restructuring of OpenAI into a revenue-generating business, which would raise more capital and possibly an IPO. Though they did not reveal any financial terms, both companies indicated that they were trying to conclude a binding agreement in the near future.
The transition is a new step in the development of OpenAI as it tries to achieve a more traditional corporate format and increased industry collaborations. Microsoft has invested more than $11 billion in OpenAI since 2019 and would like to have long-term access to the technology. Meanwhile, OpenAI is scrambling to diversify its cloud providers and increase revenue as the demand for AI models increases.
The OpenAI nonprofit would have access to over $100 billion under the suggested structure, approximately a quarter of the proposed $500 billion value. This would turn it into one of the best-endowed nonprofits in the world. The company is awaiting regulatory approval from California and Delaware, and the company hopes to complete the conversion by the end of the year. Otherwise, there is a risk of billions of dollars being tied up as a result of failure.
Previously, Microsoft had exclusive rights to the technology of OpenAI under the name of Azure but has reduced its grip as OpenAI develops its own data centres and forges partnerships with competitors such as Oracle and Google. Although the two companies are close partners, they also compete in consumer chatbots and enterprise AI tools. Microsoft is also working on its own AI models to minimise its dependency on the technology of OpenAI but wants assurances of access in case OpenAI proclaims its systems to possess humanlike intelligence.
