OpenAI announced in a blog post on September 11 that its nonprofit arm will now be ‘paired’ with an equity stake in its PBC (Public Benefit Corporation), which would exceed $100 billion.
The ChatGPT maker also said that it has reached a Memorandum of Understanding (MoU) with Microsoft for the conversion of its for-profit arm into a PBC. This structural shift was announced by OpenAI in May.
“This recapitalisation would also enable us to raise the capital required to accomplish our mission—and ensure that as OpenAI’s PBC grows, so will the nonprofit’s resources, allowing us to bring it to historic levels of community impact,” said the company in the announcement.
OpenAI was founded as a nonprofit organisation, and in 2019, it introduced a for-profit limited liability company (LLC) under nonprofit control to raise investments with capped profits.
“Our PBC charter and governance will establish that safety decisions must always be guided by this mission. We continue to work with the California and Delaware Attorneys General as an important part of strengthening our approach, and we remain committed to learning and acting with urgency to ensure our tools are helpful and safe for everyone, while advancing safety as an industry-wide priority,” added OpenAI.
Besides, the MoU marks the next phase of the relationship between Microsoft and OpenAI.
Microsoft has been a major backer of OpenAI over the past few years and has invested over $13 billion since 2019.
Initially, the deal granted Microsoft exclusive rights to power OpenAI’s tools through its cloud platform Azure, but these restrictions have relaxed over the past few months.
Instead, Microsoft now holds a right of first refusal (ROFR), meaning OpenAI must offer the company a chance to provide additional capacity first, but can turn to other providers if declined.
OpenAI has since engaged in various data centre projects, including its own (Project Stargate) and partnerships with companies such as Oracle and Google.
However, even as OpenAI has expanded its investor base, Microsoft remains OpenAI’s most significant external shareholder. Moreover, OpenAI’s API is exclusive to Microsoft’s Azure.
However, reports indicate rising tensions between the two companies, mainly due to a clause regarding Artificial General Intelligence (AGI) in their agreement. It states that if OpenAI achieves AGI, Microsoft would lose access to OpenAI’s advanced technologies.
Initially, this was meant to prevent a monopoly and keep control with OpenAI’s nonprofit board. However, Microsoft sees ongoing access as vital for its business, especially to compete with rivals like Google.
