OpenAI Officially Transitions to For-Profit Status, Microsoft Secures 27% Stake
OpenAI has officially completed its transition from a non-profit research organisation to a for-profit entity – a move that positions the company to attract billions in new investments and possibly prepare for a future stock market listing.
As part of the restructuring, OpenAI and Microsoft have revised their long-standing partnership, granting the tech giant a 27% ownership stake in the ChatGPT maker. The new terms reshape a relationship that began in 2019 when OpenAI was still a non-profit focused on artificial intelligence research.
The updated agreement gives Microsoft greater freedom to pursue artificial general intelligence (AGI) – technology that could one day surpass human intelligence – either independently or in collaboration with other partners. OpenAI also announced plans to create an independent expert panel to validate any future claims that the company has achieved AGI, though the panel’s membership has not yet been disclosed.
Microsoft will continue to provide support to OpenAI’s board as it navigates the shift to for-profit status. OpenAI confirmed that its CEO, Sam Altman, will not hold any equity stake in the newly structured company, in line with earlier reports by Bloomberg.
Under previous agreements, Microsoft gained exclusive rights to many of OpenAI’s innovations in exchange for providing extensive cloud computing resources. However, OpenAI has since expanded its partnerships with other major technology firms, fueling speculation of a growing AI investment bubble.
The new deal extends Microsoft’s rights to OpenAI’s AI models through 2032 but excludes consumer hardware products. Following the announcement, Microsoft’s market valuation briefly crossed the $4 trillion mark for the second time in its history, reinforcing its status as one of the most valuable companies in the world.
OpenAI’s growth trajectory has been nothing short of meteoric since it introduced ChatGPT in 2022, bringing AI-powered tools into mainstream use. At the company’s DevDay event earlier this month in San Francisco, Altman revealed that ChatGPT now boasts more than 800 million weekly active users.
Now valued at around $500 billion, OpenAI continues to diversify its offerings, including ChatGPT Atlas — an AI-powered browser positioned as a competitor to Google Chrome – and a video generation tool called Sora.
However, the company’s rapid expansion has not been without controversy. Last week, OpenAI restricted its Sora 2 model from producing deepfake videos of Dr. Martin Luther King Jr. after objections from the late civil rights leader’s family. The company also confirmed plans to allow adult erotica generation for verified users, sparking further debate over content moderation and ethical boundaries.
Critics argue that OpenAI’s shift toward profitability could come at the expense of responsible innovation, warning that the company’s pursuit of growth risks overshadowing broader mental health and ethical concerns surrounding advanced AI technologies.
