Microsoft Keeps 27% Stake in OpenAI Valued at $135 Billion after restructuring
Microsoft has secured a 27 per cent stake in OpenAI as part of a new definitive agreement between the two companies, the tech giants revealed in a statement on Tuesday. The agreement signifies a transformation in their collaboration, occurring after the reorganization of OpenAI into a for-profit entity known as OpenAI Group public benefit corporation Bret Taylor, chair of the OpenAI board of directors, stated, “The OpenAI Foundation, its nonprofit entity, holds equity in the for-profit currently valued at approximately $130 billion.” According to the agreement, Microsoft’s investment in the newly formed OpenAI Group PBC is valued at approximately $135 billion. According to the statement, Microsoft’s stake in OpenAI’s for-profit entity was 32.5 per cent before the recapitalisation and new funding rounds.
Microsoft stated that the agreement maintains the “key elements” of their partnership, while enabling it to keep exclusive rights to OpenAI’s technology and Azure integration until the emergence of Artificial General Intelligence. OpenAI characterizes AGI as AI systems that possess intelligence surpassing that of humans. However, the agreement also redefines several aspects of intellectual property, product development, and commercial collaboration. The statement indicated that Microsoft’s IP rights for models and products will persist until 2032, extending to post-AGI models under certain safety conditions. “Once AGI is declared by OpenAI, that declaration will now be verified by an independent expert panel,” it added.
Microsoft’s research-related IP rights will persist until 2030 or the verification of AGI, whichever comes first, while excluding model architecture, weights, inference and fine-tuning code, and data-centre technology. Under the revised agreement, OpenAI also acquires the ability to collaborate with third parties on both API and non-API products. However, API products developed with third parties will be exclusive to Azure, Microsoft’s cloud computing platform. “Non-API products may be served on any cloud provider,” the statement said. In a similar vein, Microsoft will possess the autonomy to independently seek AGI, whether on its own or in collaboration with third parties. “If Microsoft uses OpenAI’s IP to develop AGI prior to AGI being declared, the models will be subject to compute thresholds; those thresholds are significantly larger than the size of systems used to train leading models today,” the companies stated.
Microsoft’s intellectual property rights now exclude OpenAI’s consumer hardware. The agreement also noted that OpenAI has committed to purchasing an additional $250 billion worth of Azure services. However, Microsoft will no longer retain the right of first refusal as its compute provider. The new arrangement preserves the enduring partnership between the two companies, providing both with enhanced operational flexibility as they progress towards AGI development.
