OpenAI completes long-awaited restructuring, signs new agreement with Microsoft

OpenAI CEO Sam Altman

Alex Brandon/AP

OpenAI announced on Tuesday that it had completed its restructuring — a move it has previously said is vital to attract future capital and remain competitive in the AI race.

The AI startup’s unusual structure, including its control by a non-profit board, was thrust into the spotlight in November 2023 when the board briefly removed Sam Altman as CEO before he returned days later.

“OpenAI has completed its recapitalization, simplifying its corporate structure. The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives,” the company wrote in a blog post.

“The nonprofit, now called the OpenAI Foundation, holds equity in the for-profit currently valued at approximately $130 billion, making it one of the best resourced philanthropic organizations ever. The recapitalization also grants the Foundation additional ownership as OpenAI’s for-profit reaches a valuation milestone.

OpenAI also gave an update on its partnership with its top investor, Microsoft.

OpenAI said on Tuesday that it had “signed a new definitive agreement that builds on our foundation, strengthens our partnership, and sets the stage for long-term success for both organizations.”

As part of the new agreement, Microsoft now holds a $135 billion stake in the for-profit OpenAI business public benefit corporation, or OpenAI Group PBC, “representing roughly 27 percent on an as-converted diluted basis, inclusive of all owners—employees, investors, and the OpenAI Foundation.”

“Excluding the impact of OpenAI’s recent funding rounds, Microsoft held a 32.5 percent stake on an as-converted basis in the OpenAI for-profit,” OpenAI said.

This is a developing story…

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