Open AI Is in Critical Discussion With Microsoft for IPO

Open AI is in talks to be in a crucial negotiation with its biggest partner and investor, Microsoft. Following this latest AI tech news, sources say AI tools have currently made many major changes to their company’s reconstruction plans. Although the goal of this AI startup would be the same- turning a business stem into a for-profit public benefit corporation, its nonprofit board will stay in control.

Summary:

1. OpenAI is in a crucial negotiation with Microsoft, its biggest partner and investor, to transform its business arm into a for-profit public benefit corporation.

2. The AI startup is also facing challenges beyond negotiations, such as making sure that its business arm remains under the direction of a non-profit board and appeasing opponents who are concerned about profit over purpose.

3. The partnership is critical for OpenAI’s restructuring and may influence its role in constructing massive language models.

It is said the AI tool company has talked with a few sources, who see Microsoft, which has invested $13 billion till now in Open AI, as the keyholder that will have to approve the restructuring plan.

While the main concern of the negotiation is how much equity Microsoft will receive in the new for-profit entity, the companies are also reportedly renegotiating their overall agreement, with Microsoft offering to give up some of its equity in exchange for access to OpenAI technology developed after the current 2030 due date.

What is this Renegotiation Between Open AI and Microsoft?

The partnership is critical for OpenAI’s restructuring and may influence its role in constructing massive language models, which are the foundation of technologies such as ChatGPT.

OpenAI CEO Sam Altman has announced his goal to create artificial general intelligence that outperforms human skills.

OpenAI recently abandoned plans to remove authority from its non-profit board, but it still aims to transform its business arm into a public benefit company, allowing for investor equity while focusing on social impact.

Negotiations have been complicated by a deteriorating relationship between OpenAI and Microsoft, even though the two companies remain close collaborators. Microsoft incorporates OpenAI technology into its software and provides significant computer resources for AI model training.

Since OpenAI targets enterprise clients and collaborates with firms like SoftBank and Oracle, its expanding goals have made it more competitive with Microsoft.

OpenAI, the AI startup, was founded in 2015 by Altman, Elon Musk, and others formed a for-profit subsidiary in 2019, allowing outside investors to share in future revenues. Recent investors, particularly Microsoft and SoftBank, do not see their support as a contribution, indicating a trend toward a more conventional for-profit structure.

OpenAI raised $6.6 billion in October 2024 and an additional $40 billion in March 2025, with plans to distribute shares upon conversion to a public benefit company. Investors may retrieve their capital if OpenAI fails to restructure, but officials remain optimistic about their supporters’ commitment.

Ahead of this latest AI tech news, the restructuring is considered critical for raising big funds, with one insider stating that securing $40 billion under a limited profit structure is not possible.

However, OpenAI faces problems beyond negotiations with Microsoft, such as making sure that its business arm remains under the direction of a non-profit board and appeasing opponents who are concerned about profit over purpose.

Musk, who quit OpenAI due to differences with Altman, is pursuing legal action to block reorganization.

OpenAI must also persuade authorities in California and Delaware that its approach is consistent with its aim to help the public.

Industry insiders fear that failing to establish a public benefit corporation may jeopardize OpenAI’s fundraising, IPO chances, and capacity to compete with Big Tech rivals.