Top News

OpenAI has reached a new tentative agreement with Microsoft – its key partner and investor – in a move that could reshape the company’s governance and financial structure, according to a report published by The Associated Press Friday.

Key Takeaways:

• OpenAI nonprofit gets $100B equity stake in for-profit arm.
• Microsoft and OpenAI are still believed to be negotiating final terms.
• California and Delaware Attorneys General, meanwhile, are investigating governance changes.
• Musk has sued OpenAI, claiming the organisation broke its founding mission.
• AGI (artificial general intelligence) clause could cut Microsoft out of future commercial rights.

As part of the deal, OpenAI’s nonprofit board, which technically controls the company, will now reportedly receive a staggering $100 billion equity stake in its for-profit arm.

“For the next phase of our partnership,” OpenAI said in a joint statement with Microsoft, while suggesting that the agreement remains nonbinding for now.

A Nonprofit With Growing Power, But Questions Linger

OpenAI was originally founded in 2015 as a nonprofit Artificial Intelligence (AI) research lab. Though it launched a for-profit subsidiary to scale its products like ChatGPT, the nonprofit board retained control. However, it’s unclear whether the new $100 billion equity stake would translate into a controlling interest.

According to the report, OpenAI has also tasked its board with a decision on when its systems achieve AGI (artificial general intelligence) – defined as AI that “outperforms humans at most economically valuable work.” If AGI is reached, then Microsoft will lose its rights to commercialise it, the report said, citing the original deal.

Regulators Watch Closely

OpenAI’s restructuring has caught the attention of regulators. “Together, we are particularly concerned with ensuring that the stated safety mission of OpenAI as a non-profit remains front and center,” AP quoted California Attorney General Rob Bonta as saying.

Bonta’s office, reports suggest, is actively investigating OpenAI’s governance and financial changes, alongside Delaware Attorney General Kathy Jennings, with members on the probe team also reportedly expressing concern about ChatGPT safety, following a meeting with OpenAI’s legal team in Delaware.

Microsoft’s Role

Microsoft invested USD one billion into OpenAI in 2019, becoming the exclusive provider of computing power for its models, as reported by AP. In turn, Microsoft integrated ChatGPT technology deeply into its own suite of AI products.

However, the companies had earlier this year announced that OpenAI would begin building its own compute infrastructure, starting with a new mega data center in Texas’s Abilene, in partnership with Oracle.

Thursday’s statement, though, suggests that both sides are still “actively working to finalise contractual terms in a definitive agreement.”

Elon Musk’s Lawsuit

Meanwhile, OpenAI is also reportedly facing a lawsuit from Elon Musk, who co-founded the company and provided early funding. The suit alleges that OpenAI is betraying its nonprofit mission by shifting control and commercialisation efforts away from its original purpose: building AI for the benefit of humanity.

The post OpenAI Restructures Its Microsoft Deal – Here’s What We Know So Far appeared first on NewsX.