Technology giant Microsoft and OpenAI have signed a new agreement that allows the ChatGPT maker to more easily raise money and go public.
Microsoft said it supported the OpenAI board moving forward with the formation of a public benefit corporation and recapitalisation under which it will own a $135 billion stake representing 27% on a fully diluted basis including all owners.
The deal removes limits on OpenAI’s ability to raise capital to fund its growth, which have been in place since the two companies joined forces in 2019, well before the 2022 launch of OpenAI’s popular ChatGPT large language model.
It means OpenAI can evolve away from its non-profit status and undertake an initial public offering to fund CEO Sam Altman's plans to develop data centres and cutting-edge technology.
Altman will not receive equity in the restructured company and would continue to be paid $76,000 a year, an OpenAI spokesperson said.
Microsoft also said OpenAI would buy $250 billion of Azure cloud computing services, but it would no longer have the right of first refusal to provide computing services to OpenAI.
“Since 2019, Microsoft and OpenAI have shared a vision to advance artificial intelligence responsibly and make its benefits broadly accessible,” Microsoft said in a statement.
“What began as an investment in a research organisation has grown into one of the most successful partnerships in our industry.
“As we enter the next phase of this partnership, we’ve signed a new definitive agreement that builds on our foundation, strengthens our partnership, and sets the stage for long-term success for both organisations.”
Microsoft shares (NASDAQ: MSFT) shares $10.55 (1.98%) higher at $542.07, capitalising it at US$4.04 trillion (A$6.13 trillion).
