OpenAI has secured Microsoft’s support to convert its for-profit arm into a Public Benefit Corporation, with the nonprofit parent retaining control and taking a stake worth more than $100 billion.
What Has Actually Happened?
OpenAI and Microsoft say they’ve signed a non-binding memorandum of understanding (MOU) for “the next phase” of their partnership. The agreement essentially lays the groundwork for OpenAI to recapitalise its for-profit division as a Delaware-based Public Benefit Corporation (PBC), with final terms still subject to approval by regulators in California and Delaware.
Finalising
In a joint statement, the two companies confirmed they are “actively working to finalise contractual terms in a definitive agreement”, while reaffirming a shared focus on “delivering the best AI tools for everyone, grounded in our shared commitment to safety.”
OpenAI board chair Bret Taylor explained the nonprofit would continue to control the organisation and, under the new structure, receive a direct equity stake in the PBC “that would exceed $100 billion.” If approved, this would make the OpenAI nonprofit one of the most well-resourced philanthropic entities in the world.
Why Move To A Public Benefit Corporation?
Public Benefit Corporations are a legal category of for-profit companies in Delaware that are required to pursue a stated public mission and balance it against shareholder returns. For example, for OpenAI, the appeal may lie in it being able to raise capital from traditional investors without abandoning the public-interest commitments baked into its original nonprofit charter.
OpenAI says the recapitalisation will allow it to raise the funds needed to advance its mission (developing artificial general intelligence, known as AGI, that benefits humanity) while also increasing the nonprofit’s financial capacity to support community-focused initiatives.
For example, OpenAI has already launched a $50 million grant fund aimed at boosting AI literacy, local innovation and economic opportunity, and says the new structure will unlock the ability to do much more.
How This Differs From Altman’s Earlier Model
Looking back to when Altman took over as CEO, OpenAI created a “capped-profit” structure in 2019. That model allowed for external investment but placed a ceiling on returns, with any surplus redirected to the nonprofit. It was a novel attempt to balance innovation and social purpose, but one that has since come under strain as the company’s ambitions (and valuations) have soared.
This new move effectively replaces the capped-profit structure with a standard equity-based PBC model. In other words, while the nonprofit retains control and receives a substantial stake, it no longer sets a formal cap on investor returns. This should allow increased flexibility while maintaining a clear mission through governance.
Another View
That all appears fine, however a more cynical observer might see OpenAI’s move as a calculated step to unlock vast commercial gains while preserving a veneer of altruism. For example, by converting its for‑profit arm into a Public Benefit Corporation, OpenAI can raise unlimited investment, offer conventional equity, and potentially go public, free from the constraints of its earlier capped‑profit model. The nonprofit’s newly announced $100 billion stake, while impressive, could be viewed by some as a way to reframe a profit‑driven shift as a philanthropic victory.
Critics might also argue the change allows OpenAI to loosen its reliance on Microsoft without damaging the partnership, giving it room to grow across multiple cloud providers. At the same time, positioning the nonprofit as a powerful oversight body may help deflect regulatory scrutiny and safety concerns. In this light, the transition could be seen not so much as a governance breakthrough, but more as a reputational strategy, designed to balance investor demands, scale ambitions and public trust without truly relinquishing control.
Why Microsoft Is Supporting It
Microsoft’s strategic interest is pretty obvious. It has invested billions in OpenAI since 2019 and integrated its models across Azure, Microsoft 365 and Copilot. At the same time, OpenAI’s growing infrastructure needs and commercial scale are pushing it beyond what a single partner, or a limited-profit structure, can support.
Backing the transition to a PBC lets Microsoft preserve its commercial relationship with OpenAI while accommodating the startup’s need for expansion. Under existing agreements, Microsoft still gets preferred access to OpenAI’s technology and remains the primary cloud provider. But that relationship is no longer exclusive.
For example, earlier this year, OpenAI reportedly agreed to spend $300 billion with Oracle Cloud over five years from 2027. It also signed a deal with SoftBank for its Stargate data centre project, making it clear that future growth depends on a multi-cloud strategy.
Capital, Scale And Market Power
The most striking figure in the announcement is the $100 billion+ valuation attached to the nonprofit’s stake. While not independently verified, the figure implies a significant step-up in OpenAI’s market value and sends a clear message to future investors that the new entity will be structured for major fundraising, possibly including an IPO.
For businesses, the shift could mean faster product rollouts, greater scale, and more robust service levels. A clearer corporate structure may also make OpenAI a more straightforward partner for UK organisations, particularly in the public sector or regulated industries where governance and transparency matter.
What It Means For Microsoft
With this deal, Microsoft retains strong commercial and technical ties but avoids being dragged into future boardroom drama. The events of late 2023, when OpenAI’s nonprofit board briefly removed and then reinstated Altman, highlighted the governance tensions in the previous setup.
By endorsing the PBC model, therefore, Microsoft helps stabilise the structure without needing to formally take control. It still benefits from deep integration of OpenAI models into its ecosystem, including for UK enterprise clients using Azure AI.
For example, Microsoft has already embedded OpenAI models into key products like Teams, Word and Excel. The new structure ensures those integrations can continue at pace while OpenAI pursues its wider commercial ambitions.
Competitors
OpenAI’s rivals are unlikely to stay quiet about this deal. For example, Anthropic, backed by Amazon and Google, has operated as a Public Benefit Corporation since 2023 and has positioned itself as the safety-first alternative. Meta continues to champion open models, and Elon Musk’s xAI has made governance part of its pitch.
With OpenAI now adopting a more standard commercial structure, scrutiny will likely turn to how it balances mission and profit in practice. Advocacy groups such as Encode and The Midas Project have already raised concerns that the transition risks diluting the company’s nonprofit ideals.
Critics argue that such a large financial shift, paired with increased commercial freedom, could incentivise risky behaviours unless safeguards are put in place.
Challenges, Risks And Legal Hurdles
While the MOU with Microsoft clears a major obstacle, the transition still depends on regulatory approval. OpenAI says it is working with the Attorneys General of California and Delaware to ensure compliance with corporate and charitable law. That process could take months and may come with conditions or oversight requirements.
OpenAI has also faced legal pressure from former partners. For example, Elon Musk’s lawsuit against the company argues that it has strayed from its original nonprofit mission, with Microsoft’s influence and recent capital plans cited as evidence.
Also, former employees and AI researchers have warned that governance alone may not be enough to ensure safety, particularly if OpenAI moves faster than regulators can respond. For example, OpenAI’s governance review committee, created in 2024 after the board crisis, has yet to publish its findings. How this ties into the new PBC structure remains unclear.
What Businesses Should Watch
For UK companies, several things are likely to really matter here. For example, the recapitalisation could accelerate development of enterprise tools built on OpenAI’s foundation models. Also, the nonprofit’s philanthropic arm may expand its UK grant funding, particularly in education and local innovation. Businesses will also want clarity on how OpenAI’s safety commitments are maintained and enforced under the new structure.
Most of all, OpenAI’s move suggests that the AI industry may be entering a new phase, i.e. one where growth, governance and public interest must be balanced at unprecedented scale. This transition may not be the final step, but it could help determine how AI leadership evolves and what role UK organisations are able to play.
What Does This Mean For Your Business?
OpenAI’s decision to push ahead with this structural change appears to be aimed at unlocking new sources of investment and long-term commercial growth while maintaining public trust in its mission. The Public Benefit Corporation model offers a legal route to do both at once, though whether that balance holds in practice will depend on how governance is applied and enforced. The nonprofit’s stake, reportedly worth more than $100 billion, is designed to show that public interest will still have a seat at the table, but that does not guarantee influence if financial pressures take priority.
For Microsoft, the arrangement allows it to protect its existing technical integrations and product roadmap without getting dragged into OpenAI’s internal politics. It also avoids the risk of losing access if OpenAI were to move away from Azure entirely. At the same time, it now must accept that OpenAI will work with other cloud providers, potentially reducing Microsoft’s control over where and how OpenAI’s most advanced models are deployed.
For UK businesses, the practical outcome could be positive in the short term. More capital and more scale should mean faster rollouts, better support, and a more stable supply of cutting-edge models across a growing number of platforms. For regulated industries and public bodies, a clearer governance framework may help address procurement concerns about transparency and safety. However, businesses will need to stay alert to how these commitments are upheld and what contractual guarantees actually make it into commercial terms.
Critics may argue that this is less about safeguarding humanity and more about enabling a lucrative move to public markets. That may or may not prove true, but for now the deal reflects the reality that AI development is already operating on a scale where traditional structures and funding models no longer apply. The coming months will reveal whether OpenAI can keep its mission and its commercial future aligned, and how closely regulators and investors are prepared to hold it to that promise.