Microsoft and OpenAI have resolved a major dispute, addressing a lingering question ahead of the company’s earnings on Wednesday.
On Tuesday’s “TPBN” podcast, the show hosts John Coogan and Jordi Hays spoke with Microsoft CEO Satya Nadella after the announcement, noting that he is now a “peacetime CEO,” as the dispute with OpenAI has been resolved.
“I think AI and everything that it entails is going to be a core driver, and some of it’ll come from just this intelligence and this sort of continual march of capability,” Nadella said in response to the hosts’ question on what he expects from the OpenAI agreement. “I’m always focused on long-term return.”
The two companies reached a deal that lifts restrictions that have limited OpenAI’s ability to raise money since 2019, when it gave Microsoft sweeping rights to its work in exchange for billions in cloud computing power.
The landmark deal was announced just a day before Microsoft’s third-quarter earnings release and call.
The deal would allow the ChatGPT maker to complete its restructure from a nonprofit to a for-profit company, which will give CEO Sam Altman greater authority to strike deals and steer the company as it embarks on its mission to build $500 billion worth of data centers over the next decade.
OpenAI initially started as a nonprofit but restructured following Altman’s brief ouster in late 2023, forming a new for-profit arm called OpenAI Group PBC to allow the firm to function more like a traditional company. The nonprofit still governs the for-profit entity.
However, the original deal with Microsoft constrained OpenAI’s ability to raise funds from outside investors and secure computing contracts even after its restructuring. That limit became a point of conflict between the two companies as ChatGPT’s user base skyrocketed alongside the need for more computing power. OpenAI now boasts roughly 800 million weekly ChatGPT users and is working to build a series of large data centers across the country.
As part of the new deal, Altman won’t receive equity in the new structure or any change to his $76,000 annual salary, and the company has not announced any plans to go public. Microsoft will retain its 27% stake in the AI giant and continue to hold certain rights to OpenAI products and AI models until 2032. Most of Altman’s wealth comes from his role at the Y Combinator and his early investments in companies like Airbnb, Stripe, and Reddit.
Microsoft shares rose around 2% on Tuesday at market closing time after announcing the deal with OpenAI.
“OpenAI has completed its recapitalization, simplifying its corporate structure,” Bret Taylor, Chair of the OpenAI Board of Directors, wrote in a blog post on Tuesday. “The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.”
OpenAI and Microsoft did not immediately respond to requests for comments.
Read the full article here
