Microsoft invests $135 bn in OpenAI under new partnership agreement

Microsoft and OpenAI have entered a new phase in their long-standing collaboration, formalising their relationship through a definitive agreement that redefines their roles and future direction in artificial intelligence (AI) development.

Under the new terms, the software company will support ChatGPT parent's transition into a public benefit corporation (PBC) and its recapitalisation. Following this move, the company’s investment in OpenAI Group PBC is valued at approximately $135 billion, representing about 27% on an as-converted diluted basis, including all owners such as employees, investors, and the company foundation. Before the AI company’s recent funding rounds, the software company’s stake was 32.5% on an as-converted basis in the for-profit entity.

The software company’s IP rights for models and products are now extended through 2032, including post-AGI models, with additional safety guardrails in place.

The agreement maintains several core elements of the existing partnership. The AI company will continue as the software company’s frontier model partner, and the latter will retain exclusive IP rights and Azure API exclusivity until the achievement of Artificial General Intelligence (AGI).

At the same time, the agreement introduces new provisions that give both companies more flexibility to independently advance innovation and growth. Once AGI is declared by the AI company, the declaration will be verified by an independent expert panel.

The agreement allows the AI company to collaborate with third parties to develop some products. API-based products created through such collaborations will remain exclusive to Azure, while non-API products can be hosted on other cloud platforms. The software giant, meanwhile, can now pursue AGI development independently or with other partners.

The updated agreement preserves the companies' collaboration while allowing them to pursue independent advancements in the evolving field of AI.