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Microsoft, OpenAI Restructure Partnership, Clearing Path for IPO and New Growth
Microsoft and OpenAI on Tuesday announced a sweeping restructuring deal that frees the ChatGPT maker from its nonprofit constraints, paving the way for a possible public listing to fund CEO Sam Altman’s ambitious push into massive data centers and next-generation AI technology.
The agreement transforms OpenAI into a public benefit corporation (PBC) valued at around $500 billion, still overseen by a nonprofit that retains a financial stake in the company’s success. During a livestream, Altman said an initial public offering was the most likely path forward, given the capital required to build and train powerful AI models like ChatGPT.
Altman and chief scientist Jakub Pachocki said OpenAI’s next phase will focus on becoming a platform that enables developers and businesses to build tools and services atop its technology.
“We can now take this technology and this user base and get the world to build amazing new companies and applications on top of it,” Altman said.
Capital Constraints and Tensions
The deal removes restrictions that had limited OpenAI’s ability to raise funds or access Microsoft’s computing resources since their 2019 partnership. Those constraints became flashpoints after ChatGPT’s meteoric rise in 2022 strained the company’s computing needs.
Talks over restructuring began after Altman’s brief ouster in late 2023, which exposed friction within OpenAI’s unusual governance model that curbed investor influence—including Microsoft’s.
Altman, who earns about $76,000 annually from OpenAI, will not receive equity in the restructured firm—a reversal from earlier discussions. He said OpenAI has $1.4 trillion in financial obligations tied to building roughly 30 gigawatts of new data-center infrastructure in the coming years. Each gigawatt currently costs up to $50 billion to build, though Altman aims to cut that to $20 billion.
Microsoft Retains 27% Stake
Under the new structure, OpenAI Group PBC will operate more like a traditional company, strengthening Altman’s control and giving him flexibility to raise capital, strike deals, and expand globally. Microsoft will keep a 27% stake but lose its right of first refusal to be OpenAI’s exclusive compute provider or to produce OpenAI-branded hardware.
Microsoft will continue receiving roughly 20% of OpenAI’s revenue for several years and retain certain product rights until at least 2032. The new agreement also requires an independent panel to verify when OpenAI achieves artificial general intelligence (AGI)—AI systems capable of human-level reasoning.
Microsoft’s investment of $13.8 billion has ballooned to an implied value of $135 billion, delivering nearly a 10x return. Its shares rose 2% following the announcement, pushing its market capitalization back above $4 trillion.
Toward a Clearer Path
Bret Taylor, chair of the OpenAI Foundation board, said the recapitalization “simplifies OpenAI’s corporate structure” and gives the nonprofit “a direct path to major resources before AGI arrives.” The Foundation will hold 26% of OpenAI Group and has warrants for additional shares based on performance milestones.
Industry observers say the move could bring more stability and accountability to OpenAI’s complex structure.
“OpenAI still faces scrutiny around transparency, data usage, and safety oversight,” said Adam Sarhan, CEO of 50 Park Investments. “But overall, this structure provides a clearer path for innovation and governance.”
Microsoft also confirmed that OpenAI has agreed to purchase $250 billion worth of Azure cloud computing services as part of the deal—cementing the companies’ partnership even as OpenAI gains more independence.
“If you told me OpenAI is going public next year, I wouldn’t be surprised,” Nvidia CEO Jensen Huang said. “This could be one of the most successful public offerings in history.”
