Microsoft, OpenAI reach new deal valuing OpenAI at $500 billion

Core Insights - Microsoft and OpenAI have reached a deal allowing OpenAI to restructure into a public benefit corporation, valuing it at $500 billion and paving the way for a potential public offering [1][2] Group 1: Deal Structure and Valuation - Microsoft will hold a 27% stake in OpenAI Group PBC, valued at approximately $135 billion [2] - The restructuring removes previous constraints on OpenAI's capital raising efforts, transitioning from a nonprofit to a for-profit model [2][5] - OpenAI's recapitalization simplifies its corporate structure while the nonprofit retains control over the for-profit entity [5] Group 2: Financial Implications - Microsoft has invested $13.8 billion in OpenAI, with the new deal suggesting a return of nearly ten times this investment [5] - OpenAI is set to purchase $250 billion worth of Azure cloud computing services from Microsoft, eliminating Microsoft's right of first refusal for providing these services [6] Group 3: Long-term Relationship and Rights - The agreement ensures a continued partnership between Microsoft and OpenAI until at least 2032, with Microsoft retaining certain rights to OpenAI's products and AI models [4] - An independent panel will verify OpenAI's claims regarding the achievement of artificial general intelligence (AGI) [4] - Microsoft will not have rights to hardware produced by OpenAI, indicating a shift in the ownership dynamics of technology developed [7]