Microsoft has thrown its weight behind OpenAI’s plan to transition its for-profit arm into a Public Benefit Corporation (PBC), giving the company more flexibility to raise capital while keeping control in the hands of its nonprofit board.
The agreement, still subject to regulatory approval, also secures the nonprofit a stake in the PBC valued at more than $100 billion.
The two companies confirmed they have signed a nonbinding memorandum of understanding (MOU) to revise their partnership. “Microsoft and OpenAI have signed a nonbinding memorandum of understanding (MOU) for the next phase of our partnership,” they said in a joint statement. “We are actively working to finalise contractual terms in a definitive agreement.”
The unusual structure allows OpenAI to operate as a commercial enterprise while maintaining its nonprofit mission at the core.
This setup has impacted the company since its creation and famously led to the removal, and swift reinstatement, of CEO Sam Altman in 2023. With the new arrangement, OpenAI’s nonprofit will hold more financial influence than ever before.
Alongside the restructuring, the nonprofit has launched a $50 million grant initiative to support AI literacy, community-driven innovation, and economic opportunity.
Board chairman Bret Taylor said the recapitalisation “would 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.”
Microsoft remains OpenAI’s largest backer and cloud partner, but the company has been actively reducing its dependency. It recently signed a $300 billion cloud deal with Oracle, set to begin in 2027, and partnered with SoftBank on the Stargate data centre project. These moves point to OpenAI building a more independent, multi-cloud future.
The negotiations between OpenAI and Microsoft have not been without challenges. Reports reveal disagreements over intellectual property linked to Windsurf, a coding startup OpenAI once sought to acquire. The deal collapsed, with Windsurf’s team joining Google and Cognition instead.
Meanwhile, Elon Musk’s lawsuit against OpenAI continues to challenge the company’s for-profit transition, accusing it of abandoning its original nonprofit mission. Earlier this year, Musk offered a $97 billion takeover bid, which the board rejected. Ironically, the nonprofit’s stake in the PBC under the new arrangement is worth more than Musk’s proposal.
Other nonprofits, including Encode and The Midas Project, have also criticised the transition, claiming it weakens OpenAI’s founding ideals. The company has responded by issuing subpoenas and alleging its critics are financed by competitors such as Musk and Meta’s Mark Zuckerberg, allegations strongly denied by the groups.
If regulators approve the deal, OpenAI will stand in rare territory, a company attempting to balance the pursuit of profit with the governance of a mission-driven nonprofit, armed with one of the most valuable stakes in the tech industry.
