Feed: Slashdot
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Title: Microsoft, OpenAI Reach Non-Binding Deal To Allow OpenAI To
Restructure

Link: https://slashdot.org/story/25/09/12/2119247/m...

Microsoft and OpenAI have signed a non-binding deal to restructure their
partnership, paving the way for OpenAI to shift into a conventional for-
profit model and potentially go public. Reuters reports: Details on the new
commercial arrangements were not disclosed, but the companies said they were
working to finalize terms of a definitive agreement. [...] Microsoft invested
$1 billion in OpenAI in 2019 and another $10 billion at the beginning of
2023. Under their previous agreement, Microsoft had exclusive rights to sell
OpenAI's software tools through its Azure cloud computing platform and had
preferred access to the startup's technology. Microsoft was once designated
as OpenAI's sole compute provider, though it lessened its grip this year to
allow OpenAI to pursue its own data center project, Stargate, including
signing $300 billion worth of long-term contracts with Oracle, as well as
another cloud deal with Google. As OpenAI's revenue grows into the billions,
it is seeking a more conventional corporate structure and partnerships with
additional cloud providers to expand sales and secure the computing capacity
needed to meet demand. Microsoft, meanwhile, wants continued access to
OpenAI's technology even if OpenAI declares its models have reached humanlike
intelligence - a milestone that would end the current partnership under
existing terms. OpenAI said under current terms, its nonprofit arm will
receive more than $100 billion -- about 20% of the $500 billion valuation it
is seeking in private markets -- making it one of the most well-funded
nonprofits, according to a memo from Bret Taylor, chairman of OpenAI's
current nonprofit board. The companies did not disclose how much of OpenAI
Microsoft will own, nor whether Microsoft will retain exclusive access to
OpenAI's latest models and technology. Regulatory hurdles remain for OpenAI,
as attorneys general in California and Delaware need to approve OpenAI's new
structure. The company hopes to complete the conversion by year's end, or
risk losing billions in funding tied to that timeline.

Read more of this story at Slashdot.

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