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OpenAI announced the completion of a major recapitalization that simplifies its corporate structure. This structure moves from the previous setup into a new form where a nonprofit (“foundation”) controls a for-profit business.
In a part of the statement announcing the move, the company emphasized that “the nonprofit remains in control of the for-profit and now has a direct path to major resources before AGI arrives.”
The nonprofit entity is now named "OpenAI Foundation," and holds equity—valued at around $130 billion—in the for-profit arm. At the for-profit arm is now called "OpenAI Group PBC,"and it is structured as a public benefit corporation (PBC)—meaning it is designed to pursue profit while also "built to benefit everyone."
The restructure also involved a new agreement with Microsoft. Microsoft—which previously held about a 32% stake in the company’s former for-profit structure— now retains roughly a 27% stake in the newly formed for-profit entity—thr company claimed in a blog post it published alongside OpenAI's.
The 27% stake is valued at approximately $135 billion. These combined stakes and investments put the total valuation of OpenAI’s for-profit at $500 billion.
However, it's important to talk about the regulatory review of this restructuring. The state of Delaware’s Attorney General issued a “Statement of No Objection” after working with OpenAI to secure commitments around governance, mission, safety oversight, and ensuring the nonprofit retains control.
OpenAI–Microsoft Deal Clears Path to Public Offering
Before OpenAI and Microsoft reached their new agreement in September, their relationship had reportedly become strained. Then, Microsoft was exploring closer ties with another AI company— Anthropic—by using its Claude models in Copilot 365.
However, the recapitalization deal with OpenAI seems to have required compromises on both sides.
Microsoft will keep its intellectual property (IP) rights to OpenAI’s models and products until 2032, including any future systems developed after OpenAI claims to achieve artificial general intelligence (AGI). But to ensure that the claim is legit, both companies agreed to appoint an independent group of experts to verify it.
On the other hand, Microsoft gave up its IP rights over OpenAI’s upcoming consumer hardware—the devices being designed with former Apple designer Jony Ive—in exchange for OpenAI committing to spend $250 billion on Microsoft’s Azure cloud services.
Microsoft also lost its “right of first refusal,” meaning OpenAI can now choose other cloud providers in the future. Interestingly, Microsoft’s blog post didn’t mention their previous revenue-sharing deal, suggesting that part of the arrangement might have changed.
Meanwhile, this agreement clears the obstacle for OpenAI and pave the way for it to go public—which is of course one of the crucial step for securing its financial future.
Why Elon Musk Opposed OpenAI’s Shift to a For-Profit Model
Now, let's bring the story from the beginning when OpenAI was founded in 2015 by Elon Musk, Sam Altman, and several others. They started the AI company as a nonprofit research lab. Their original goal was to develop artificial intelligence safely and to make sure that the benefits of AI would be shared widely—and not to be controlled by powerful corporations.
Musk, in particular, strongly believed that AI could become dangerous if it ended up in the hands companies that are aiming profits as their objectives. That’s why OpenAI’s founding mission and structure were meant to keep it open, transparent, and non-commercial—hence the name “OpenAI.”
However, as AI research became more expensive—it continues to requires billions of dollars for computing power, data, and talent—in which the nonprofit model couldn’t keep up financially. Around 2018 and 2019, OpenAI decided to create a “capped-profit” subsidiary called OpenAI LP, allowing it to raise money from investors (including Microsoft) while still claiming to prioritize its nonprofit mission.
This shift caused tension among the founders. Elon Musk—who had already left the board in 2018—disagreed with the decision to bring in commercial interests. He argued that it betrayed the lab’s original promise to be an open and nonprofit research organization. In fact, Elon Musk filed lawsuits against OpenAI and Sam Altman in 2024; he accused them of turning the company into a profit-driven venture that's tied too close to Microsoft.
OpenAI defended its move, saying that it needed outside capital to compete with companies like Google who have already in the AI game. The company also said funds are needed to continue building safe and powerful AI models. Regardless, the company still managed to completed its recapitalization and restructured into a for-profit organization turning into a Public Benefit Corporation (PBC).
This means the AI company is now officially a profit-making entity but still legally required to pursue goals that benefit society. The nonprofit foundation retains control and an equity stake.
In nutshell,
- Elon Musk opposed the idea of OpenAI becoming for-profit organization because he feared and believed that the company would lose its public-interest mission.
- He also believed that AI could become dangerous if it ended up in the hands organizations that are aiming profits as their objectives.
- However, OpenAI became for-profit anyway because it needed funding to continue developing powerful AI models—tools required to remain competitive in the fast-evolving market.
Now, the company is operating under a hybrid structure—profit-oriented but mission-bound—to balance its financial growth with public benefit. What do you think about this restructuring? Is it a good move, or will OpenAI lose its public-interest mission? Let's know your thoughts and opinions in the comments section below.
