OpenAI and Microsoft renegotiate billion-dollar partnership ahead of potential IPO

OpenAI and Microsoft are in the midst of revising the terms of their multi-billion-dollar partnership, with the goal of paving the way for a potential public offering by the AI company.

According to a report by Financial Times, the negotiations aim to strike a balance between OpenAI’s plans for independence and Microsoft's continued access to its advanced artificial intelligence technologies.

A central point in the talks is determining how much equity Microsoft will hold in OpenAI’s restructured for-profit entity. The tech giant has invested over $13 billion (approximately ₹1.1 lakh crore) in OpenAI so far. As part of the renegotiations, Microsoft is reportedly willing to relinquish some of its equity in exchange for long-term access to OpenAI’s future innovations, especially those developed after the current agreement expires in 2030.

This deal update follows Microsoft’s initial $1 billion investment in 2019, a move that marked the beginning of its deep collaboration with the creators of ChatGPT. The original agreement is now being adjusted to reflect OpenAI’s evolution and ambitions for an IPO.

Sources familiar with the matter suggest that OpenAI has informed some investors that the share of revenue allocated to Microsoft may be reduced as part of its broader restructuring efforts, according to a recent report by The Information.

In a related development, Microsoft in January adjusted its agreement with OpenAI as it joined a joint venture with Oracle and SoftBank, aiming to build AI data centers worth up to $500 billion (around ₹42.3 lakh crore) in the United States.

While Microsoft has declined to comment on these reports, and OpenAI has yet to respond publicly, the developments suggest a significant strategic shift that could shape the future of the AI industry and its funding landscape.