OpenAI Takes Big Steps Toward Its Long-Planned Reorganization

OpenAI said on Thursday that it was giving an equity stake worth at least $100 billion to the nonprofit that controls the organization and has reached a tentative deal to settle financial issues with its partner Microsoft.

Both moves were considered essential steps that would allow OpenAI to go ahead with a plan to restructure itself — shifting from being managed by a nonprofit to becoming a public benefit corporation.

One of the biggest impediments to OpenAI changing its structure has been Microsoft’s investments. Between 2019 and 2023, Microsoft invested more than $13 billion in OpenAI, which gave the tech giant roughly 49 percent of OpenAI’s future profits. Microsoft has been reluctant to change its agreement with OpenAI without receiving ample compensation.

The twin announcements were made as OpenAI’s plan to change its operation faces increasing pressure from regulators, competitors and artificial intelligence experts who worry that it has become too focused on becoming a tech industry giant while abandoning its early promises to focus on the safety of A.I. technology.

Microsoft and OpenAI said in a joint statement that they had signed a nonbinding memorandum of understanding to restructure their relationship and that they will look to formalize it in a contract. They provided no additional details.

As part of their new deal, Microsoft and OpenAI have renegotiated the financial terms of a commercial agreement they signed in 2019. The deal includes how the two companies share technology and how they share revenue from those technologies.

The original agreement also included a clause that rescinded Microsoft’s access to OpenAI’s most powerful technology when the OpenAI board formally decided that the technology had achieved “artificial general intelligence,” or A.G.I., shorthand for a machine that matches the power of the human brain.

This clause remains part of the new agreement but has been modified, according to a person familiar with the agreement who spoke on condition of anonymity because they were not authorized to discuss it.

The announcement Thursday is the latest in a convoluted series of events that have hung in the background of OpenAI’s rapid business expansion.

OpenAI was founded about a decade ago as a nonprofit, before Sam Altman, its chief executive, and other founders attached it to a new for-profit company. But as its business has ballooned since the release of ChatGPT and it has needed to raise more money, it has been trying to transition to a more traditional for-profit structure.

That would allow the company to eventually issue shares on the stock market. A public benefit corporation is often described as an organization designed to create public and social good and allows outsiders to invest in much the same way they invest in other companies. Right now, OpenAI can’t raise money from the general public.

But the attorneys general of California and Delaware have been scrutinizing the transition, and competitors such as Elon Musk and others in the A.I. community have repeatedly raised concerns that OpenAI is turning its back on its early promises to build A.I. that would benefit humanity and not harm it.

The nonprofit that now manages OpenAI would become “one of the most well-resourced philanthropic organizations in the world,” Bret Taylor, OpenAI’s board chair, said in a blog post. The nonprofit’s stake will exceed 20 percent of the reorganized company, according to the person familiar with the deal.

(The New York Times has sued OpenAI and its partner, Microsoft, claiming copyright infringement of news content related to A.I. systems. OpenAI and Microsoft have denied those claims.)