Microsoft is reportedly the most significant shareholder obstacle to OpenAI's ongoing transition to a for-profit structure, with concerns centered on intellectual property access and the existing partnership agreement slated to run until 2030. According to a tweet from Dina Bass, "Microsoft meanwhile doesn't want to lose access to OpenAI IP before the end of its 2030 deal, or have to litigate over it, sources tell us."
The current agreement, a cornerstone of their strategic partnership, grants Microsoft exclusive access to OpenAI's application programming interface (API) on its Azure cloud and a 20% share of OpenAI's revenue. Microsoft has invested over $13.75 billion in OpenAI, securing rights to integrate OpenAI's technology into its products. This deep integration means Microsoft is keen to maintain its access to cutting-edge AI models, especially as the 2030 contract expiration approaches.
OpenAI is actively working to restructure its for-profit arm into a public benefit corporation (PBC), a move intended to facilitate significant fundraising and attract conventional equity investors. Recent funding rounds have valued OpenAI at $157 billion, with a $40 billion round contingent on this transition. However, this restructuring requires Microsoft's approval, creating a complex negotiation landscape where Microsoft's substantial stake and existing contractual rights are central.
Key points of contention in the ongoing negotiations include the size of Microsoft's equity stake in the new for-profit entity and the controversial "AGI clause." This clause, if triggered by OpenAI declaring the achievement of Artificial General Intelligence (AGI) before 2030, could significantly curtail Microsoft's contracted access to future technologies. OpenAI is also reportedly seeking adjustments to the revenue-sharing agreements and a loosening of Microsoft's exclusive cloud provider status.
Beyond Microsoft, OpenAI faces other hurdles in its for-profit evolution, including a lawsuit from co-founder Elon Musk and potential scrutiny from the California Attorney General, as alluded to in Bass's tweet. The outcome of these high-stakes negotiations is crucial for OpenAI to secure its future funding and for Microsoft to ensure continued access to the AI advancements that have become integral to its product strategy.