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OpenAI Weighs For-Profit Move Amid Talks With Microsoft | PYMNTS.com

Dec 26, 2024 - pymnts.com
OpenAI is reportedly planning to transition into a for-profit company and is in discussions with major investor Microsoft about the details of this restructuring. Microsoft, OpenAI's largest investor with a $13 billion stake, has been in talks with OpenAI since October. The discussions focus on Microsoft's equity stake in the new for-profit entity, its role as OpenAI's exclusive cloud provider, the duration of its rights to use OpenAI's intellectual property, and its 20% share of OpenAI's revenue. OpenAI announced plans to become a for-profit benefit corporation in September, emphasizing that its nonprofit board will not control the new entity. However, the restructuring faces a legal challenge from Elon Musk, who has filed a lawsuit to prevent the transition, arguing that OpenAI should not benefit from competitively sensitive information obtained through its relationship with Microsoft.

In addition to the restructuring efforts, OpenAI is expanding its sales team in response to a "paradigm shift" in corporate AI spending, according to Chief Commercial Officer Giancarlo Lionetti. The company is securing new contracts with firms in healthcare, manufacturing, and legal sectors, including Moderna and Lowe's. Lionetti highlighted that AI products are transforming work processes, offering new ways for users and customers to operate. Despite the ongoing legal and structural challenges, OpenAI remains focused on its mission to build AI that benefits everyone, maintaining that its nonprofit arm will continue to play a core role in its operations.

Key takeaways:

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  • OpenAI is planning to transition into a for-profit company and is in discussions with Microsoft, its largest investor, about the restructuring.
  • The discussions between OpenAI and Microsoft focus on Microsoft's equity stake, cloud provider exclusivity, intellectual property rights, and revenue sharing.
  • Elon Musk has filed a lawsuit to prevent OpenAI's transition to a for-profit entity, citing concerns about competitive information and investor restrictions.
  • OpenAI is expanding its sales staff and signing new contracts with companies in various sectors, indicating a shift in corporate AI spending.
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