OpenAI to convert to a public-benefit corporation … Microsoft to hold intellectual property rights until 2032

OpenAI confirmed its conversion to a public-benefit corporation (PBC) for commercialization such as an initial public offering (IPO), successfully redefining its relationship with Microsoft (MS). With this conversion, OpenAI resolved the complexity of a for-profit structure under a nonprofit and freed itself from constraints on external fundraising and capital restructuring.

Microsoft (MS) will reduce its OpenAI stake from the previous 32.5% to 27%, while retaining exclusive rights to share intellectual property (IP) related to OpenAI technology and the Azure cloud API until 2032. The cloud cooperation structure also changed. OpenAI can now move away from MS's exclusive computing supply and pursue building its own data centers and a multi-cloud strategy. However, consumer services such as ChatGPT can operate on other clouds, while B2B APIs will be exclusively provided by MS.

MS still retains the right to receive 20% of OpenAI's profits. The revenue-sharing agreement will continue for a certain period even after an AGI declaration. The nonprofit that controls OpenAI will rename itself the 'OpenAI Foundation' and will secure additional shares as the company's value rises to maintain control.

The overhaul is being seen as removing legal barriers to OpenAI pursuing an IPO. Industry voices say it also readjusted the partnership with MS to establish a balanced structure in preparation for the AGI era. Brett Taylor, chair of OpenAI's board, said, "By simplifying the corporate structure, we have completed OpenAI's capital reorganization."

Ji-hee Choi, Reporter mymasaki@hankyung.com