Microsoft and OpenAI signed a definitive agreement on October 28, restructuring their partnership with Microsoft holding an investment valued at approximately $135 billion in OpenAI Group PBC, representing roughly 27 percent on an as-converted diluted basis. The deal includes OpenAI's commitment to purchase an incremental $250 billion of Azure services.
The agreement maintains Microsoft's position as OpenAI's frontier model partner while extending intellectual property rights through 2032, now including models post-Artificial General Intelligence (AGI). A significant change allows Microsoft to independently pursue AGI development alone or with third parties, while OpenAI gains flexibility to provide API access to US government national security customers regardless of cloud provider.
OpenAI completed its recapitalisation as a public benefit corporation, with the OpenAI Foundation nonprofit holding equity valued at approximately $130 billion. The Foundation announced a $25 billion commitment across health breakthroughs and AI resilience technical solutions.
Under the revised terms, AGI declarations by OpenAI will require verification by an independent expert panel. Microsoft retains exclusive IP rights and Azure API exclusivity until AGI is achieved. The agreement permits OpenAI to jointly develop products with third parties, with API products remaining exclusive to Azure while non-API products may be served on any cloud provider.
The revenue share agreement continues until AGI verification by the expert panel, with payments structured over a longer period. Microsoft no longer holds right of first refusal as OpenAI's compute provider, though the $250 billion Azure services commitment represents significant ongoing cloud infrastructure investment.
The restructured partnership enables both companies to pursue parallel AGI development strategies while maintaining collaborative frameworks. Microsoft's extended IP rights through 2032 provide long-term technology access for enterprise customers. The $250 billion Azure commitment signals substantial cloud infrastructure scaling, with OpenAI's ability to serve government national security customers expanding market opportunities.
The agreement positions both organisations for independent growth while preserving partnership benefits. Microsoft's 27 percent stake in the $135 billion valuation represents significant strategic value. The independent AGI verification panel introduces governance oversight for AGI milestone declarations. Extended IP rights through 2032 ensure enterprise continuity for Microsoft's AI implementations, while the removal of compute provider exclusivity allows OpenAI operational flexibility in infrastructure decisions.