OpenAI negotiating with Microsoft for new billion-dollar deal to clear path for future IPO: Report

OpenAI and Microsoft are in the midst of renegotiating their multibillion-dollar partnership, seeking to redefine the terms of their strategic alliance as the ChatGPT creator prepares for a potential initial public offering (IPO), Financial Times reported on Sunday.

At the heart of the talks is how much equity Microsoft will retain in OpenAI’s for-profit entity in return for its substantial investment, which has exceeded $13 billion since 2019. The renegotiation is expected to address ownership rights, long-term access to OpenAI’s future artificial intelligence models, and the roadmap beyond their current agreement, which runs through 2030.

According to the report, Microsoft is open to reducing its equity stake in exchange for continued access to any next-generation technologies OpenAI develops after the cutoff year.

The renegotiation also includes revisions to broader contractual agreements originally set when Microsoft invested its first $1 billion into OpenAI. That deal helped cement Microsoft’s role as both a financial backer and strategic infrastructure partner, providing cloud computing power via its Azure platform.

The companies have so far declined to publicly comment on the report.

Meanwhile, a separate report from The Information last week stated that OpenAI has privately told investors it plans to reduce the share of revenue it distributes to Microsoft under the current arrangement. This move is part of broader restructuring efforts aimed at ensuring the AI research lab’s long-term independence and viability ahead of a possible IPO.

Microsoft’s influence in OpenAI’s development has grown significantly since 2019. In January, it amended parts of its deal with OpenAI after announcing a joint venture with Oracle and SoftBank Group to construct up to $500 billion worth of new AI data centres in the US, a move that further indicates its expanding ambitions in the generative AI ecosystem.