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OpenAI and Microsoft New Agreement: Beyond the Non-binding Understanding Strategic Transformation

samparker by samparker
September 13, 2025
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On Thursday, OpenAI and Microsoft signed a non-binding memorandum of understanding to reshape their existing collaboration. This step marks a significant turning point in the relationship between the two giants, aiming to offer competitive solutions to customers in the artificial intelligence market while also meeting infrastructure needs.

In the joint statement, it was stated, “Microsoft and OpenAI have signed a non-binding memorandum of understanding for the next phase of our partnership. We continue to work on the details of a final agreement. Our goal is to make the best artificial intelligence tools accessible to everyone while maintaining a focus on safety.” The structure of OpenAI and Microsoft’s role align relatively clearly with this new framework. This process highlights that OpenAI’s transformation from a non-profit organization to a for-profit company is directly connected to this development. It is noted that the largest investor (who has invested 13 billion dollars since 2019) needs to approve this transformation, and the partnership makes OpenAI’s transition from a research laboratory to a giant enterprise more complex. While OpenAI demands more computing power than Microsoft can provide, the contractual conditions between the parties sometimes lead to tension. Particularly, provisions that could restrict Microsoft’s access to the technology upon reaching AGI are discussed. AGI is defined as AI systems capable of generating at least 100 billion dollars in annual revenue.

Regarding Musk and regulatory pressures, plans to convert OpenAI into a fully profit-driven organization were halted in May due to pressures from employees and regulatory bodies. Elon Musk reportedly took legal steps, claiming that this transformation conflicts with OpenAI’s mission. Instead, OpenAI decided to maintain its non-profit governance structure and transition to a public interest company model, with shareholders remaining primarily under the non-profit umbrella. Such a regulation aims to keep the entity, valued at over 100 billion dollars, primarily owned by the non-profit side. The new memorandum of understanding also aligns with this revised model.

Approval from the attorneys general of California and Delaware is required to complete this high-risk restructuring process. Additionally, many charitable foundations are calling to prevent the transformation. According to Microsoft’s statement in January, the current collaboration between the parties will continue until 2030. Within this scope, OpenAI’s intellectual property rights, revenue-sharing model, and some privileges in APIs are preserved. Previously, Microsoft had the exclusive right to be the sole cloud provider, but in the new model, this is transformed into a “priority purchasing right” system.

In the context of the fine line between competition and dependency, the AI industry has transformed into a giant market since the initial investment agreement in 2019. OpenAI has joined the $500 billion Stargate Project with Oracle and SoftBank; meanwhile, it has started hosting competitor models such as Meta, xAI, and DeepSeek on Microsoft Azure. Although both companies attempt to reduce dependency on each other, their relationship continues strongly. Microsoft’s latest financial report states that Azure reached an annual business volume of 75 billion dollars, with OpenAI’s contribution significantly impacting this success.

Tags: AGIartificial intelligence collaborationcloud computinginvestmentMicrosoftnon-binding agreementOpenAIpublic benefit corporationStargate Projecttransformation process

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