OpenAI today disclosed that it has completed its more than yearlong effort to change its organizational structure.

The announcement doesn’t come as a complete surprise. A few days ago, SoftBank Group Corp. reportedly approved a $22.5 billion funding round for OpenAI it had originally announced in March. The approval was contingent on the completion of the ChatGPT developer’s restructuring initiative.

OpenAI launched as a nonprofit in 2015 and formed a for-profit arm four years later. Under the new organizational structure, the for-profit will be called the OpenAI Foundation. The for-profit arm, in turn, has been restructured as a public benefit corporation called OpenAI Group PBC.

The reorganization is the culmination of a more than year-long effort that drew scrutiny from the attorneys general of California and Delaware. Originally, OpenAI had planned to remove its for-profit arm from the oversight of its nonprofit parent. The ChatGPT developer skipped that step to secure the approval of the attorneys general. 

OpenAI also made other changes to its original restructuring plan. Notably, the board committee that monitors its for-profit arm’s artificial intelligence safety efforts will remain part of the OpenAI Foundation. 

The OpenAI Foundation is set to receive a $130 billion stake in the for-profit arm. According to OpenAI, that stake will grow if the for-profit’s valuation surpasses a certain undisclosed threshold. Some of the OpenAI Foundation’s shares will go toward a newly announced $25 billion program to support medical research and AI safety initiatives. 

“The more OpenAI succeeds as a company, the more the non-profit’s equity stake will be worth, which the non-profit will use to fund its philanthropic work,” OpenAI board Chair Bret Taylor wrote in a blog post today.

Microsoft Corp., one of OpenAI’s most important investors, had a 32% stake prior to the reorganization. That stake has been reduced to 27.5%. In exchange, the tech giant received several favorable changes to its partnership agreement with OpenAI. 

The ChatGPT developer has signed a contract to purchase $250 billion worth of Azure cloud services over time. Additionally, it will broaden Microsoft’s access to its AI models. Microsoft’s access now extends to 2032 and encompasses any future models that OpenAI may designate as artificial general intelligence, or AGI. Such models weren’t covered under the original partnership agreement.

Microsoft will receive access to not only OpenAI’s commercial models but also certain “confidential methods used in the development of models and systems.” That doesn’t include model architectures, weights or fine-tuning code. Additionally, OpenAI won’t share the custom AI chips it’s developing with Broadcom Inc. or its planned consumer hardware products. 

The companies also revised the terms of their go-to-market collaboration. Under the new partnership agreement, OpenAI may team up with third parties to develop certain types of products. However, offerings implemented as application programming interfaces will have to be sold exclusively on Azure.

Microsoft, for its part, may now pursue AGI research independently of OpenAI. Furthermore, it can use OpenAI’s intellectual property to support that research.

OpenAI’s simplified organizational structure could make it easier for the for-profit arm to raise funding. Additionally, the move may help clear the company’s path to an eventual stock market listing. OpenAI Chief Executive Officer Sam Altman told Bloomberg that a public offering is currently not “top of mind” for the AI provider and a timeline has not yet been set. 

Photo: Focal Foto/Flickr