On Thursday, OpenAI revealed that it had entered into a non-binding understanding with Microsoft, its most prominent and deeply invested backer, to restructure its existing for-profit business arm into a Public Benefit Corporation (PBC). By definition, a PBC is a corporate structure specifically designed to balance financial performance with a broader responsibility to serve the interests of society. If this proposed transformation is ultimately approved by the relevant state regulatory authorities, the new structure would grant OpenAI the flexibility to seek substantial new streams of capital from external investors, all while laying the foundation for a future pathway toward filing as a publicly traded company.
In an official blog post expanding on the announcement, Bret Taylor, the Chairman of OpenAI’s Board, clarified that the nonprofit entity which originally founded and governed the organization would not be dissolved or displaced. Instead, that nonprofit would preserve a controlling influence over the major operational decisions of the startup. As a crucial element of the non-binding agreement, the nonprofit would also secure a highly significant financial position by receiving equity in the forthcoming PBC valued at well over $100 billion—a sum that underscores both the scale of OpenAI’s growth and the stakes of its partnership with Microsoft.
Further emphasizing the seriousness of this development, OpenAI and Microsoft issued a joint statement noting that the two organizations had signed a non-binding memorandum of understanding, or MOU, to guide what they termed the next stage of their long-term collaboration. Unlike contracts, MOUs are not enforceable in a court of law; their purpose is to serve as a formalized document capturing each party’s intentions, roles, and expectations before the final agreement is codified. Both companies signaled confidence in their relationship, explaining that they were in the process of refining these preliminary terms into a legally definitive agreement that would finalize their shared commitments.
This announcement appears to conclude what insiders described as months of high-stakes negotiations concerning OpenAI’s restructuring strategy. Under the current iteration of the partnership, Microsoft enjoys an advantageous position—namely privileged access to OpenAI’s cutting-edge technology as well as status as its principal provider of cloud services. Yet, the circumstances today are vastly different from when Microsoft first injected capital into the fledgling company in 2019. At that time, ChatGPT had not yet become a cultural and commercial phenomenon. As the tool expanded dramatically and revenues surged, OpenAI reportedly began to push back against certain terms of the partnership, seeking greater independence by limiting Microsoft’s exclusive control over cloud infrastructure.
Taylor also revealed that the two companies are actively engaging with officials from the Attorneys General of California and Delaware—two key states where OpenAI has regulatory ties—indicating that the transformation into a PBC cannot be completed without formal legal clearance. Representatives from those state offices, however, did not provide comment when contacted by TechCrunch, underscoring both the ongoing sensitivity of the process and its dependence on third-party regulators.
Tensions between the two partners have not been a secret. In recent months, debates over control and influence reportedly reached heightened levels of frustration. According to reporting from The Wall Street Journal, one particularly contentious point emerged when Microsoft sought to take control of Windsurf, an artificial intelligence coding startup that OpenAI was itself considering acquiring. OpenAI resisted ceding such assets and maintained that it was important to preserve the independence of Windsurf’s technologies. When negotiations failed to produce a compromise, the potential acquisition collapsed entirely. Subsequently, Windsurf’s co-founders accepted positions at Google, while the rest of the startup’s team was absorbed by Cognition, effectively removing the firm from Microsoft and OpenAI’s orbit altogether.
At the same time, OpenAI’s move toward a for-profit hybrid structure has provoked heightened attention beyond Microsoft, particularly from Elon Musk. Musk is currently engaged in litigation against OpenAI, claiming that founders Sam Altman and Greg Brockman, along with the organization itself, abandoned the nonprofit mission that Musk had once supported. Within that legal challenge, lawyers representing Musk have consistently attempted to highlight Microsoft’s influence and the negotiations surrounding OpenAI’s shift to a Public Benefit Corporation, suggesting that these discussions demonstrate a deviation from the company’s altruistic roots. Earlier this year, Musk even attempted a dramatic intervention by making an unsolicited takeover offer valued at $97 billion—a bid that OpenAI’s board decisively rejected. Analysts at the time remarked that his actions, even if unsuccessful, may have inadvertently spurred a reevaluation of the nonprofit’s equity value, pushing it upward.
Notably, according to Board Chairman Bret Taylor, the nonprofit’s negotiated stake in OpenAI’s proposed PBC ultimately surpasses the valuation that Musk had implied in his acquisition proposal. This revelation underscores the magnitude of OpenAI’s worth under its reimagined structure and reinforces the central role that Microsoft continues to play in supporting the company’s trajectory despite prior disagreements.
As the situation remains fluid and contingent on regulatory evaluation, this marks only the latest chapter in an evolving story. The details of the agreement, the regulatory response, and the long-term implications for the future of corporate governance in artificial intelligence remain to be determined. What is clear, however, is that OpenAI’s journey from nonprofit origins to a potential public entity embodies one of the most consequential experiments in balancing technological innovation with social responsibility. This is a developing story, and additional updates are expected in the coming weeks.
Sourse: https://techcrunch.com/2025/09/11/openai-secures-microsofts-blessing-to-transition-its-for-profit-arm/
