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Microsoft is reportedly in advanced talks with OpenAI for a new agreement that would give it ongoing access to the startup’s technology even if OpenAI achieves what it defines as AGI, or advanced general intelligence. If the deal goes through, it would clear a key hurdle in OpenAI’s transition toward becoming a fully commercial enterprise.
The companies have been negotiating regularly, and they could come to an agreement in a few weeks, Bloomberg reports, citing three anonymous sources. The report cited some of the sources as saying that while the talks have been positive, other roadblocks could emerge in the form of regulatory scrutiny and Elon Musk’s lawsuit to block OpenAI’s for-profit transition.
OpenAI is currently structured as a mission-driven nonprofit that oversees a capped for-profit company — a setup that’s meant to limit how fully it can commercialize or raise money. That structure hasn’t stopped it from raising billions and operating like a traditional tech company, but OpenAI still wants to shake off its constraints.
Microsoft, OpenAI’s biggest backer with $13.75 billion invested and rights to some of the ChatGPT maker’s IP, has put up meaningful roadblocks to OpenAI’s future as a for-profit company, with talks dragging on for months.
Microsoft wants a bigger stake in the restructured company and seeks to secure its access to OpenAI’s tech beyond the current deal, which ends in 2030 or whenever OpenAI says it has achieved AGI — though no one can really agree on what that means.
Microsoft has built its Azure OpenAI Service around the smaller company’s models, and has integrated the startup’s tech into Copilot across Windows, Office, and GitHub. If OpenAI suddenly declares it has achieved AGI and cuts off access, Microsoft would lose a huge strategic advantage. The ChatGPT maker has reportedly also told its investors that it expects to pay Microsoft a lower share of its revenue as it progresses.
A source told Bloomberg that OpenAI also hopes to guarantee that Microsoft deploys OpenAI’s technology safely, especially as it nears AGI.
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Microsoft also stands to gain from OpenAI becoming a for-profit company. The current setup caps investor returns, so a more standard structure would give Microsoft a chance to receive formal equity and significant returns, in addition to access to OpenAI’s tech.
Bloomberg reports that the two companies have been negotiating an equity stake for Microsoft in the low- to mid-30% range.
