Microsoft and OpenAI are reportedly engaged in advanced discussions concerning a new agreement. This agreement aims to secure Microsoft’s continued access to OpenAI’s technology, even in the event that OpenAI achieves artificial general intelligence (AGI).
According to a Bloomberg report citing anonymous sources, these negotiations have been ongoing for several months with the intention of facilitating OpenAI’s transition into a fully commercial enterprise. The prospective agreement is designed to address potential limitations within OpenAI’s current operational structure.
OpenAI is presently structured as a mission-driven nonprofit organization with oversight over a capped for-profit entity. This unique arrangement is intended to restrict the extent to which OpenAI can fully commercialize its products or raise capital. Despite having already raised billions of dollars and functioning similarly to a traditional technology company, OpenAI desires to remove these constraints.
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Microsoft, as OpenAI’s primary financial backer, having invested $13.75 billion and securing rights to some of OpenAI’s intellectual property, has presented what Bloomberg describes as “meaningful roadblocks” to OpenAI’s transition to a fully for-profit model. These discussions have reportedly been protracted. Microsoft seeks a larger ownership stake in the restructured company. It also aims to ensure its access to OpenAI’s technology extends beyond the existing agreement, scheduled to expire in 2030 or upon OpenAI’s declaration of achieving AGI.
Microsoft’s Azure OpenAI Service is built upon OpenAI’s models. The company has integrated OpenAI’s technology into Copilot across platforms such as Windows, Office, and GitHub. A premature cutoff of access to OpenAI’s technology, triggered by a declaration of achieving AGI, would represent a significant strategic setback for Microsoft. OpenAI has also reportedly indicated to its investors an expectation to pay Microsoft a reduced share of its revenue as the company progresses.
One source revealed to Bloomberg that OpenAI also aims to secure guarantees that Microsoft will deploy its technology in a safe manner, particularly as AGI becomes a closer reality. The pursuit of safety measures reflects a growing concern as AI capabilities advance.
The transition of OpenAI into a fully for-profit company presents potential benefits for Microsoft. The current structure imposes limits on investor returns, whereas a standard for-profit structure would enable Microsoft to receive formal equity and potentially significant financial returns, in addition to retaining access to OpenAI’s technology. Bloomberg reports that the ongoing negotiations involve a potential equity stake for Microsoft in the “low- to mid-30% range.”
