OpenAI and Microsoft are currently negotiating Microsoft’s stake in OpenAI as the AI company shifts to a for-profit model. According to a report by The Wall Street Journal (WSJ), the two companies are working out how much Microsoft will own after its significant investments in the startup.
Microsoft has invested close to $14 billion in OpenAI since 2019, making it the company’s biggest investor. At the time, OpenAI was worth much less than it is now, with its recent funding round valuing the company at an impressive $157 billion.
Currently, Microsoft, along with other investors, is entitled to a share of future profits from OpenAI’s for-profit subsidiary. However, those returns are capped, and the negotiations aim to clarify Microsoft’s exact equity in the newly for-profit company.
Another key issue being discussed is Microsoft’s governance rights, as it will likely play a significant role in shaping OpenAI’s future. To navigate these talks, both companies have brought in heavy hitters—Microsoft has hired Morgan Stanley, and OpenAI has turned to Goldman Sachs and former Citigroup banker Michael Klein for advice.
The discussions are not without complications. If Microsoft’s stake in OpenAI becomes too large, it could trigger regulatory concerns. The U.S. Federal Trade Commission (FTC) has already launched an antitrust investigation into Microsoft, OpenAI, and Nvidia, focusing on their influence in the artificial intelligence industry. The Commission began looking into the AI sector back in January 2024, scrutinizing the investments and partnerships of major companies, including Amazon, Alphabet, Microsoft, Anthropic, and OpenAI.
Microsoft serves as OpenAI’s exclusive cloud provider, and OpenAI powers Microsoft’s Copilot AI application. However, OpenAI recently signaled its intention to explore other data center providers. In June, it was reported that OpenAI signed a deal to use compute capacity at an Oracle data center in Abilene, Texas, being developed by Crusoe. That deal has since expanded, with OpenAI now renting the entire facility, which could grow to a 2GW compute capacity.
These negotiations are ongoing, but OpenAI has a two-year deadline to transition fully into a for-profit company. If this isn’t completed within that time, investors in the latest funding round will be able to request refunds.
Despite the shift to a for-profit structure, OpenAI says it will continue to operate as a “public benefit corporation,” aiming to generate social good through its profits and work in a sustainable way. CEO Sam Altman is expected to receive equity in the company, but the details of that arrangement are still being finalized.
