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Microsoft, OpenAI Discuss Equity Shift in $13B Deal

Coin WorldSunday, May 11, 2025 3:52 pm ET

1min read

Microsoft and OpenAI are in discussions to renegotiate their investment deal, a move that could reshape their partnership and have significant implications for the AI industry. The talks center around Microsoft potentially relinquishing a portion of its equity in OpenAI in exchange for continued access to the AI company's products and models beyond 2030, when the original terms of their deal are set to expire.

Microsoft has been a major financial backer of OpenAI, investing over $13 billion since 2019. The current negotiations involve revisiting the terms of a broader contract signed in 2019, when Microsoft first acquired an interest in the AI firm. A key point of contention is the amount of equity Microsoft will receive in the new for-profit entity that OpenAI is planning to create.

OpenAI's restructuring plans have faced pushback from co-founders like Elon Musk and early investors. The AI firm, originally founded as a non-profit in 2015, began considering a shift to a for-profit corporation in 2024. However, this plan was met with criticism, particularly from Musk, who questioned the legality and the original objectives of OpenAI. In response to the backlash, OpenAI announced in May 2025 that it would abandon its purely for-profit model and instead convert to a public benefit corporation, controlled by a non-profit entity.

The negotiations between Microsoft and OpenAI are further complicated by the evolving dynamics of their relationship. As OpenAI's enterprise business has grown and it pursues ambitious projects like the Stargate infrastructure initiative, the partnership has become more intricate. OpenAI is also considering reducing Microsoft's revenue share, which is currently set at 20% through 2030. This could significantly alter the financial aspects of their collaboration.

The renegotiation is not only about equity but also about securing new funding and establishing the framework for future collaborations. OpenAI aims to restructure its multibillion-dollar partnership with Microsoft to better align with its long-term goals. The outcome of these negotiations will be crucial in shaping the future strategies and competitive positions of both companies in the rapidly advancing AI industry.

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