Sources: Microsoft remains the biggest holdout among investors in OpenAI's restructuring, seeking assurance that the changes will protect its $13.75B investment

After months of public pressure, OpenAI walked back part of its effort to create a more conventional for-profit company …

Bloomberg 2025-05-06

Context & Ripple Effects

OpenAI's governance and commercial structure had already become a point of negotiation with Microsoft, including its stake, IP access and revenue rights in the for-profit entity. Microsoft’s earlier funding was also partly structured through cloud purchases, giving the partnership leverage beyond a conventional equity investment (cloud-linked funding structure).

The dispute matters because the largest strategic backer’s consent appears central to a restructuring intended to preserve OpenAI’s ability to operate commercially. Subsequent talks over an IPO-ready structure and continued technology access show that ownership, governance and platform rights were being negotiated together (IPO-related negotiations with Microsoft).

First-order effects

OpenAI must provide Microsoft with protections for its $13.75 billion investment before it can fully resolve the restructuring with its most consequential investor.
Microsoft gains negotiating leverage over the new structure, particularly where any change could affect the value or durability of its investment and commercial relationship.

Second-order effects

Other investors and counterparties face a delayed or less certain path to a final structure while Microsoft’s terms remain unresolved.
The negotiations broaden from corporate form into commercial rights: later reporting tied Microsoft’s willingness to adjust equity to continued access to OpenAI technology, underscoring the linkage between financing and distribution (continued technology-access terms).

Third-order effects

If this pattern persists, frontier AI labs will find that restructuring is constrained not just by governance goals but by the contractual claims of cloud and capital partners.
The case points toward more financialized AI partnerships, in which equity, compute commitments, IP access and revenue participation are negotiated as a single strategic package rather than separate transactions.

The trend: Frontier AI labs are increasingly balancing mission-driven governance structures against the concentrated financial and infrastructure leverage of their strategic backers.

Discussion

@edzitron.com Ed Zitron on bluesky
They could foreseeably approve it but you have to wonder why they didn't sort this with Microsoft before announcing the change. Apparently this change is enough for SoftBank to move forward, according to Altman, which also gives Microsoft even more leverage [embedded post]
@mattmday Matt Day on x
After months of public pressure, OpenAI walked back part of its effort to create a more conventional for-profit company, but its restructuring plans still have not received the blessing of a major stakeholder: Microsoft https://www.bloomberg.com/...
@shiringhaffary Shirin Ghaffary on x
NEW: MSFT has not yet agreed to OpenAI's restructure plans and is a key holdout in negotiations needed to get the restructure done (along w/ approval from state AG offices) per sources Still being decided how much equity MSFT gets from @dinabass + me https://www.bloomberg.com/...
@viacristiano Cristiano Lima-Strong on x
Hearing this week with Sam Altman + Brad Smith just got a bit more interesting
@timkellogg.me Tim Kellogg on bluesky
OpenAI is backing away from full for-profit — There still is a for-profit PBC, but the assets and intellectual property is going to be owned by the non-profit, meaning a less independent for-profit — This is a concession to local government officials concerned about Musk — …
@markriedl Mark Riedl on bluesky
OpenAI non-profit will maintain control of the OpenAI for-profit. The for-profit entity will restructure as a Public Benefit Corporation. Because, um, saving us from the rise of evil AI is a public benefit or something. — www.cnbc.com/2025/05/05/o...
@timfduffy.com Tim Duffy on bluesky
OpenAI is giving up on buying out their nonprofit! They're transitioning the for profit to a PBC (with uncapped profits), and the nonprofit will own a majority of the PBC, though OpenAI hasn't stated the exact share. Although I don't understand everything here, his seems like a…
@tyleraking.com Tyler King on bluesky
One of those instances where the selfish interest of Musk to spite a competitor accidentally aligned with public interest. [embedded post]
@jeffjarvis@mastodon.social Jeff Jarvis on mastodon
OpenAI: Oh, nevermind. The not-for-profit will stay in charge and the for-profit will become a public-benefit corp. — https://openai.com/...
@openai @openai on x
4 facts about our structure: -OpenAI will continue to be controlled by the current nonprofit -Our existing for-profit will become a Public Benefit Corporation -Nonprofit will control & be a significant owner of the PBC -Nonprofit & PBC will continue to have the same mission
@todor_m_markov Todor Markov on x
Glad you're making this commitment. I do think it's unfortunate that you only made it after public pressure and the Attorneys General getting involved. Had you done this back in December, it would have looked like principle, not like you got dragged kicking and screaming. Stil…
@thezvi Zvi Mowshowitz on x
Tentatively this seems like a reasonable compromise. Now that we've established what you are, it's time to haggle over the price.
@jameswoodmanv James Woodman on x
OpenAI is following the AOL playbook, aiming to monopolize control of a transformative technology “AOL, hustling to appease the wrath of locked-out users, is throwing money at the problem to increase its bandwidth” - WIRED, Jan 17, 1997 “We want to be able to operate and get
@xwang_lk Xin Eric Wang on x
Suggestion: how about becoming the NGO version of NSF-AI to support fundamental AI research in academia? OpenAI would win the reputation and talents immediately and in the long run. @sama
@autismcapital @autismcapital on x
🚨 NEW: OpenAI says that it's structuring its for-profit business as a Public Benefit Corporation (PBC) that will be controlled by their nonprofit. Translation? Corporate shell games to raise money and nothing changes. Carry on. [image]
@andrewcurran_ Andrew Curran on x
CNBC has some direct commentary from the video call OAI took this morning with reporters. [image]
@cjkraymond Cameron Raymond on x
i've always had some reservations about the original structure and thought the blip highlighted its downsides (e.g., if we're a fiduciary to “humanity”, what are the mechanisms by which humanity can actually enact change?) but overall think this is a good change!
@openai @openai on x
A message from Bret Taylor, Chair of the OpenAI Board of Directors, and a letter from @sama about our structure. https://openai.com/...
@haydnbelfield Haydn Belfield on x
I wonder what this means for the Assist Clause in the Charter [image]
@neilturkewitz Neil Turkewitz on x
OpenAI's blog post said. “Our mission remains the same.” Is that supposed to be comforting? Beyond the inchoate & anodyne expressions of “benefitting humanity,” what does that mission entail? Misappropriating the creative works of the world's cultural workers to build AI models?
@arpitrage Arpit Gupta on x
How are we supposed to expect these people to align superhuman AI with our species interests, when they can't even figure out how to align principal agent problems at their own company?
@garrisonlovely Garrison Lovely on x
And some final predictions: 1. I think the profit caps will be gone 2. I think OAI won't have to pay back the $26.6B to investors (bc they signed off on this in exchange for profit caps to be gone). They might pay some back, but not all.
@mikeisaac Rat King on x
nights like the m*t gala make me realize being in SF might as well be another planet me tweeting “openAI STUNS in abandoning restructuring plan” while popcrave posts photos of fka twigs as the cheshire cat
@pitdesi Sheel Mohnot on x
Wow. OpenAI couldn't convert to a for profit, will stay under non-profit control [image]
@mihonarium Mikhail Samin on x
I'm happy to see this. Huge thanks to Attorneys General of Delaware and California. Hopefully, OpenAI are being candid about the nonprofit retaining control over the for-profit.
@josephjacks_ @josephjacks_ on x
Still not open. Still paternalistic. Still censored. Still centralized. Still for the enrichment of the few.
@garrisonlovely Garrison Lovely on x
Biggest Qs: 1. What does this mean for investors? OAI reportedly gave investors in its last two rounds the ability to clawback $26.6B (+ interest) if it didn't restructure as a for-profit. This doesn't appear to be explicitly addressed in the blog post.
@tunguz Bojan Tunguz on x
Back to square one. [image]
@garrisonlovely Garrison Lovely on x
3. I think nonprofit will be compensated 10s of billions for the removal of the caps 4. I think the nonprofit will largely use that money to buy OAI services for nonprofits and govts (targeting constituencies that can make life difficult for it, like CA nonprofits)
@andrewcurran_ Andrew Curran on x
Doesn't look good for the caps. [image]
@danprimack Dan Primack on x
Today's OpenAI profit/nonprofit news may give some investors a chance to ask for their money back, but I'm not hearing there's any interest in making such an ask.
@kantrowitz Alex Kantrowitz on x
Elon won [image]
@pitdesi Sheel Mohnot on x
the OpenAI “structure” page on the website has a comically large disclaimer [image]
@ccadelago Christopher Cadelago on x
OpenAI announced Monday it has updated its restructuring plan to allow its nonprofit to retain control of the for-profit arm of the unorthodox technology organization, amid escalating scrutiny and a legal challenge by former business partner Elon Musk. https://www.politico.com/..…
@haydenfield Hayden Field on x
BREAKING: OpenAI bows to public pressure from civic leaders, ex-employees and the attorneys general of California and Delaware, announcing the nonprofit will retain control even as it restructures. https://www.cnbc.com/...
@garrisonlovely Garrison Lovely on x
WOW Genuinely shocked at this news. I've been covering OpenAI's efforts to shed its nonprofit controls since October & spoken to lots of experts. The plan was legally fraught and opposed by powerful interests, but it was hard not to feel that OAI would just get its way 🧵 [image]
@jachiam0 Joshua Achiam on x
OpenAI is, and always will be, a mission-first organization. Today's update is an affirmation of our continuing commitment to ensure that AGI benefits all of humanity.
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