Microsoft and OpenAI announced a restructuring deal that reshapes the AI industry’s most consequential partnership by quite a lot. The agreement transforms OpenAI into a public benefit corporation, values the company at $500 billion, and grants Microsoft a 27% stake worth approximately $135 billion, nearly ten times the tech giant’s $13.8 billion investment since 2019.
More importantly, capital-raising restrictions that have constrained OpenAI since its 2019 partnership with Microsoft were removed. The startup had traded extensive rights over its work for access to costly cloud computing infrastructure. As ChatGPT exploded in popularity, those limitations sparked significant tension between the two firms, hampering OpenAI’s ability to secure external funding and computing contracts as user demand skyrocketed.
AGI Wild Card
The restructuring introduces a mechanism unprecedented in corporate history. It’s an independent expert panel that will verify when OpenAI achieves artificial general intelligence. That includes AI systems that match or exceed human capability across most economically valuable work. This determination carries enormous consequences.
Microsoft’s IP rights now extend through 2032, including models that reach AGI. The revenue-sharing agreement between the companies remains in effect until the expert panel verifies AGI has been achieved, though payments will stretch over a longer timeframe. Once AGI is declared and verified, the financial dynamics shift dramatically.
The panel requirement represents a compromise from OpenAI’s previous stance that its own board would determine when AGI arrived, effectively ending the Microsoft partnership at that point. Microsoft can now pursue AGI independently or with third parties, while OpenAI gains flexibility to collaborate with other partners on specific product developments, though API products developed with third parties remain exclusive to Azure.
This AGI verification mechanism addresses a major point of ambiguity that has haunted the partnership: Who decides when humanity’s most transformative technology has been achieved? The answer now involves external arbitration rather than internal declaration, adding accountability but also introducing unpredictability into both companies’ strategic planning.
The Equity Paradox
CEO Sam Altman will not receive equity in the restructured company, despite investor pressure and discussions throughout 2024 suggesting he would receive a 7% stake worth over $10 billion. His compensation remains unchanged at $76,000 annually, an arrangement that previously raised eyebrows among investors.
“This is my childhood dream job,” Altman said at last year’s DealBook Summit.
“Getting to work on AGI and getting to sit in the room with the smartest researchers in the world and go on this crazy adventure, like that is what I always wanted to do.”
The decision reversed expectations from restructuring discussions that began after Altman’s temporary ouster in late 2023, an episode that highlighted how OpenAI’s unusual structure limited investor and business partner power. The new OpenAI Group PBC functions more like a traditional company, granting Altman greater authority to strike deals and shape the broader AI industry, without the personal financial stake which is typical of founder CEOs.
The OpenAI Foundation now holds a 26% stake worth approximately $130 billion in the for-profit arm, with the remaining 47% distributed among current and former employees and other investors. An initial $25 billion commitment was announced by the nonprofit toward accelerating health breakthroughs and technical solutions for AI resilience.
Computing Independence
The deal majorly rebalances power around computing resources. A commitment was made by OpenAI to purchase $250 billion of Azure cloud services, cementing long-term financial interdependence. However, Microsoft relinquished its right of first refusal to provide computing services, a requirement that represented one of the largest sources of friction as ChatGPT’s user base and research needs caused computing demands to explode.
This shift matters because OpenAI projects spending $350 billion on server rentals through 2030, with operational expenses reaching $20 billion by 2027, up from $5 billion in 2024. The company’s exclusive reliance on Microsoft for computational resources had become untenable as it scaled operations supporting 800 million weekly users by October 2025.
Microsoft no longer holds rights to any consumer hardware produced by OpenAI, a significant concession given OpenAI’s $6.5 billion acquisition of longtime Apple design chief Jony Ive’s startup io Products in March. OpenAI’s independence in developing physical products is preserved through this exclusion while Microsoft’s access to software models and APIs is maintained.
The regulatory approval process proved unexpectedly smooth. Delaware Attorney General Kathy Jennings issued a Statement of No Objection to the recapitalization, while California Attorney General Rob Bonta stated his office would “not be in court opposing OpenAI’s recapitalization plan” after securing concessions ensuring charitable assets serve their intended purpose and safety remains prioritized.
What This Means
The restructuring positions both companies for an industry where worldwide AI spending will reach $1.5 trillion in 2025 according to Gartner. Microsoft shares rose 2.1% Tuesday, reclaiming its position above the $4 trillion market cap threshold, while investors in AI infrastructure companies have seen continued momentum.
Gil Luria, head of technology research at DA Davidson, said,
“This resolves the longstanding issue of OpenAI being organized as a not-for-profit and settles ownership rights,”
The companies remain intertwined through 2032 via the cloud contract and Microsoft’s retained rights to OpenAI products and AI models.
What started as a nonprofit AI safety group has become a $500 billion commercial enterprise attempting to develop AGI while remaining accountable to a nonprofit foundation, a hybrid structure facing scrutiny as AI competition intensifies globally.4
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