OpenAI Enters 'Tough Negotiation' With Microsoft, Hopes to Raise Money With IPO

OpenAI is currently in "a tough negotiation" with Microsoft, the Financial Times reports, citing "one person close to OpenAI." On the road to building artificial general intelligence, OpenAI hopes to unlock new funding (and launch a future IPO), according to the article, which says both sides are at work "rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation...." Microsoft, meanwhile, wants to protect its access to OpenAI's cutting-edge AI models... [Microsoft] is a key holdout to the $260bn start-up's plans to undergo a corporate restructuring that moves the group further away from its roots as a non-profit with a mission to develop AI to "benefit humanity". A critical issue in the deliberations is how much equity in the restructured group Microsoft will receive in exchange for the more than $13bn it has invested in OpenAI to date. According to multiple people with knowledge of the negotiations, the pair are also revising the terms of a wider contract, first drafted when Microsoft first invested $1bn into OpenAI in 2019. The contract currently runs to 2030 and covers what access Microsoft has to OpenAI's intellectual property such as models and products, as well as a revenue share from product sales. Three people with direct knowledge of the talks said Microsoft is offering to give up some of its equity stake in OpenAI's new for-profit business in exchange for accessing new technology developed beyond the 2030 cut off... Industry insiders said a failure of OpenAI's new plan to make its business arm a public benefits corporation could prove a critical blow. That would hit OpenAI's ability to raise more cash, achieve a future float, and obtain the financial resources to take on Big Tech rivals such as Google. That has left OpenAI's future at the mercy of investors, such as Microsoft, who want to ensure they gain the benefit of its enormous growth, said Dorothy Lund, professor of law at Columbia Law School. Lund says OpenAI's need for investors' money means they "need to keep them happy." But there also appears to be tension from how OpenAI competes with Microsoft (like targeting its potential enterprise customers with AI products). And the article notes that OpenAI also turned to Oracle (and SoftBank) for its massive AI infrastructure project Stargate. One senior Microsoft employee complained that 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 article's conclusion? Negotiating new deal is "critical to OpenAI's restructuring efforts and could dictate the future of a company..." Read more of this story at Slashdot.

May 11, 2025 - 20:41

OpenAI Enters 'Tough Negotiation' With Microsoft, Hopes to Raise Money With IPO

OpenAI is currently in "a tough negotiation" with Microsoft, the Financial Times reports, citing "one person close to OpenAI." On the road to building artificial general intelligence, OpenAI hopes to unlock new funding (and launch a future IPO), according to the article, which says both sides are at work "rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation...." Microsoft, meanwhile, wants to protect its access to OpenAI's cutting-edge AI models... [Microsoft] is a key holdout to the $260bn start-up's plans to undergo a corporate restructuring that moves the group further away from its roots as a non-profit with a mission to develop AI to "benefit humanity". A critical issue in the deliberations is how much equity in the restructured group Microsoft will receive in exchange for the more than $13bn it has invested in OpenAI to date. According to multiple people with knowledge of the negotiations, the pair are also revising the terms of a wider contract, first drafted when Microsoft first invested $1bn into OpenAI in 2019. The contract currently runs to 2030 and covers what access Microsoft has to OpenAI's intellectual property such as models and products, as well as a revenue share from product sales. Three people with direct knowledge of the talks said Microsoft is offering to give up some of its equity stake in OpenAI's new for-profit business in exchange for accessing new technology developed beyond the 2030 cut off... Industry insiders said a failure of OpenAI's new plan to make its business arm a public benefits corporation could prove a critical blow. That would hit OpenAI's ability to raise more cash, achieve a future float, and obtain the financial resources to take on Big Tech rivals such as Google. That has left OpenAI's future at the mercy of investors, such as Microsoft, who want to ensure they gain the benefit of its enormous growth, said Dorothy Lund, professor of law at Columbia Law School. Lund says OpenAI's need for investors' money means they "need to keep them happy." But there also appears to be tension from how OpenAI competes with Microsoft (like targeting its potential enterprise customers with AI products). And the article notes that OpenAI also turned to Oracle (and SoftBank) for its massive AI infrastructure project Stargate. One senior Microsoft employee complained that 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 article's conclusion? Negotiating new deal is "critical to OpenAI's restructuring efforts and could dictate the future of a company..."