In what’s called a “non-binding” memo of understanding (MOU), Microsoft and OpenAI put out a joint statement that will give its original nonprofit entity a new equity stake in its for-profit arm worth over $100 billion.
Breaking down the new structure
- For years, OpenAI has operated a unique hybrid model: a for-profit Public Benefit Corporation (PBC) that builds products like ChatGPT, all controlled by a nonprofit parent organization focused on safety.
- Now, that nonprofit will be a confirmed major shareholder in the new PBC to the tune of $100 billion big ones.
- As the for-profit side makes more money, the nonprofit’s philanthropic war chest will swell to what OpenAI calls “historic levels of community impact.”
Solving AI’s biggest dilemma
This restructuring aims to solve AI’s biggest dilemma: how to fund the insanely expensive race to artificial intelligence without selling out the mission of bringing “open” AI to everyone.
To show they’re serious, the nonprofit immediately launched a $50M grant initiative. The first wave of funding will go to organizations working on:
- AI literacy and public understanding.
- Community-led innovation with AI.
- Expanding economic opportunity.
Sealing the deal?
Now, this doesn’t “seal the deal” so to speak. There’s still the California and Delaware Attorneys General to worry about, who just sent OpenAI an extremely serious warning over concerns of multiple cases of deaths that have happened after people have used ChatGPT as a therapist. Altman recently addressed this in a wide-ranging interview with Tucker Carlson, covering a lot of the nuances and difficulties of solving this issue.
But it does seem to indicate Microsoft and OpenAI have settled enough of their differences (Axios did a great job explaining that here). You could almost have looked at the past two days of major AI news stories as a sort of tit-for-tat between the two:
- First, you had reports of Microsoft using Anthropic in Office / Copilot.
- Then, you had reports of OpenAI’s massive $300B deal with Oracle.
- We speculate just for fun here, but we can hear it now: “You want Anthropic in the Office? Fine, we want Oracle in the cloud!” Who folded? Who can say… .
That bodes well for OpenAI’s other plans… its $500B Stargate data center project, its plans to burn $115B over five years, and an eventual and inevitable IPO to help pay for it all.
Editor’s note: This content originally ran in the newsletter of our sister publication The Neuron. To read more from The Neuron, sign up for its newsletter.