Microsoft, OpenAI reach non-binding deal to allow OpenAI to restructure

Core Insights - Microsoft and OpenAI have signed a non-binding deal to restructure OpenAI into a for-profit entity, indicating a new phase in their partnership to fund AI development [1][2] - The details of the new commercial arrangements are still being finalized, as OpenAI aims to raise capital and eventually go public [2][4] Investment and Financial Structure - Microsoft has previously invested a total of $11 billion in OpenAI, with $1 billion in 2019 and $10 billion at the beginning of 2023 [3] - OpenAI's nonprofit arm is projected to receive over $100 billion, which is approximately 20% of the $500 billion valuation it seeks in private markets [5] Operational Changes - OpenAI is transitioning to a more conventional corporate structure and is pursuing partnerships with additional cloud providers to expand its sales and computing capacity [4][6] - Microsoft has reduced its exclusive control over OpenAI's computing resources, allowing OpenAI to explore its own data center project and sign contracts with other cloud providers like Oracle and Google [4] Regulatory Considerations - OpenAI's new structure requires approval from attorneys general in California and Delaware, with a goal to complete the conversion by the end of the year to avoid losing significant funding [6] Competitive Landscape - Both companies compete in various AI product segments, while Microsoft is also developing its own AI models to lessen reliance on OpenAI's technologies [7]