OpenAI and Microsoft May Be Reworking Their Partnership. Is OpenAI Going Public?

In exchange for accessing new technologies developed by OpenAI after the existing 2030 cut-off date, Microsoft is said to have offered to give up “some” of its equity stake in OpenAI’s newly for-profit business, reported the Financial Times on Sunday, May 11. The story cites three unnamed people “with direct knowledge of the talks.”

OpenAI has been rumored to be working toward going public. Originally founded as a nonprofit, the organization continues as a nonprofit today with the control of a for-profit LLC founded in 2019.

the negotiation

“OpenAI and Microsoft are rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation designed to allow the ChatGPT maker to launch a future initial public offering,” according to the FT, “while protecting the software giant’s access to cutting-edge artificial intelligence models.”

Microsoft’s partnership with OpenAI dates back to 2019, when it made a $1 billion investment in OpenAI. That was three years before OpenAI released ChatGPT to the public and touched off the wildfire era of generative AI.

Then in 2023, Microsoft expanded the deal to a multi-year, multi-billion-dollar deal—the same year that Microsoft debuted Copilot AI, an ostensible competitor to ChatGPT. Now, with OpenAI’s increasing interest in moving into the profit-making side of the business, Microsoft finds itself in intensified competition with its partner.

“The friction comes partly due to style,” according to a senior employee at Microsoft, left unnamed by the FT article. “OpenAI says to Microsoft, ‘give us money and compute and stay out of the way: be happy to be on the ride with us.’ So naturally this leads to tensions. To be honest, that is a bad partner attitude. It shows arrogance.”

The story hedges, though, in citing a “person close to OpenAI,” who said, “Microsoft still wants [this conversion] to succeed. It’s not like it’s all gone to hell and it’s open warfare. There’s a tough negotiation, but we’re confident we’ll get it done.”