Microsoft (NASDAQ: MSFT) and OpenAI have agreed to restructure the ChatGPT maker into a public benefit corporation, valuing the company at $500 billion and giving it more control over its business operations.
This removes long-standing restrictions tied to their 2019 partnership, which had limited OpenAI’s ability to raise outside capital in exchange for Microsoft’s cloud services. As ChatGPT’s user base surged, those limits created growing tension between the two companies.
Under the new structure, Microsoft will retain a 27% stake worth roughly $135 billion, while the OpenAI Foundation, a nonprofit, will maintain controlling ownership. Microsoft’s total investment in OpenAI now stands at $13.8 billion, giving it nearly a tenfold return on paper. The agreement keeps both firms linked until at least 2032 through a major cloud-computing partnership and continued rights to OpenAI’s AI models, even if the company achieves artificial general intelligence (AGI).
OpenAI CEO Sam Altman will not receive equity in the new entity, reversing earlier discussions. The company also said it has no immediate plans for an IPO.
“OpenAI has completed its recapitalization, simplifying its corporate structure,” said Bret Taylor, chair of the OpenAI Foundation. “The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.”
Industry analysts said the deal brings long-needed clarity. Adam Sarhan, CEO of 50 Park Investments, said the new structure “provides a clearer path forward for innovation and accountability.” Gil Luria of DA Davidson added that it “resolves the long-standing issue of OpenAI’s nonprofit setup and clarifies ownership rights relative to Microsoft.”
Microsoft’s shares rose 2.5% on the news, pushing its market capitalization above $4 trillion once again.
The companies also announced that OpenAI will purchase $250 billion in Azure cloud services, while Microsoft will give up its right of first refusal for future computing contracts. Microsoft confirmed it will not hold rights to hardware developed by OpenAI, which recently acquired Jony Ive’s design firm, io Products, for $6.5 billion.
As of September, ChatGPT had more than 700 million weekly users, cementing its position as the most recognized AI platform globally.
