OpenAI Explores For-Profit Shift, Negotiates with Microsoft Stakeholder
OpenAI is considering becoming a for-profit company and discussing changes with Microsoft, its main investor with a $13 billion stake.
OpenAI reportedly wants to become a for-profit company and is discussing the transition details with Microsoft, a significant investor. News on December 26 said that the two companies have been talking about how to restructure the AI company since October. Microsoft has put $13 billion into OpenAI, making it its biggest investor.
According to someone who has talked to OpenAI CEO Sam Altman about the talks with Microsoft, the talks have been mostly about four things: Microsoft’s share of the for-profit company; whether Microsoft will continue to be OpenAI’s only cloud provider; how long Microsoft will keep the right to use OpenAI’s intellectual property in its products; and whether Microsoft will continue to take 20% of OpenAI’s revenue.
According to PYMNTS, OpenAI said in September that it would change its structure into a for-profit benefit corporation. This means that its nonprofit board will no longer be in charge of the company.
When Reuters asked about the report at the time, an OpenAI spokesperson said, “Our mission is still to build AI that helps everyone, and we’re working with our board to make sure we’re in the best position to succeed.” The nonprofit is an important part of our mission, and it will stay open.
PYMNTS reported earlier this month that Elon Musk filed a lawsuit against the company to stop the restructuring. This presents an additional challenge to the company’s efforts to change.
Musk’s xAI Petition
Musk and his AI startup, xAI, petitioned a federal court for a preliminary injunction to halt the conversion process and to prevent OpenAI’s investors from funding its competitors, including Musk’s company.
Lawyers for Musk said that OpenAI shouldn’t be able to “benefit from wrongfully obtained competitively sensitive information or coordination through the Microsoft-OpenAI board interlocks.”
Additionally, Giancarlo “GC” Lionetti, Chief Commercial Officer of OpenAI, said that the company is hiring more salespeople because of a “paradigm shift” in how much the business world spends on AI.
Lionetti said the company has signed new contracts with healthcare, manufacturing, and legal firms. For example, Lowe’s and Moderna, a company that makes vaccines, are among the new clients. “We really think that AI products are a paradigm shift,” he said. “This opens up new ways of working that you’re discussing.” “People who use and buy things are changing how they work.”
