On Thursday, OpenAI dropped a pretty big bombshell with the announcement of ChatGPT-4. It’s finalized a non-binding deal with Microsoft to rework their collaboration, allowing OpenAI to make its for-profit side a public benefit corp (PBC). This most recent development is an important and further development in the constantly evolving saga between the two tech behemoths. Microsoft still is OpenAI’s biggest backer.
That memorandum of understanding (MOU) provides not just the details of the transition but the vision for what should be different, after being hotly negotiated for months. OpenAI and Microsoft stated in a joint statement, “Microsoft and OpenAI have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership.” Strengthening the AI partnership This compact shows just how serious each company is about improving their partnership in the increasingly volatile and regulatory-minded AI arena.
The transition OpenAI, Microsoft and other defendants under the transition plan ongoing discussions with California and Delaware Attorneys General. The deal, though, still needs to get through regulatory approval before it can be finalized. Their strategic maneuvering around state legal requirements has been paramount for both organizations as they continue moving forward with their partnership.
This transition is occurring at a time of increased scrutiny from these major stakeholders. His former partner in the venture, Elon Musk, has leveled some pretty extreme accusations against the outfit. He accuses both CEO Sam Altman and President Greg Brockman of straying from OpenAI’s initial nonprofit purpose. Musk’s criticism is part of an ongoing lawsuit against OpenAI, where he seeks to challenge the company’s current direction.
Though more recently, Musk was in the news for tabling an unsolicited $97 billion OpenAI takeover bid this spring. OpenAI’s board promptly rejected his proposal. The pending complaint has prompted a vigorous discussion of OpenAI’s controversial conversion from nonprofit to for-profit status. This has made its already complex partnership with Microsoft all the more complicated.
In their suit, Musk’s legal team has been trying to dig up dirt about what went on between Microsoft and OpenAI as they negotiated this shift. Because these proceedings will determine the future of both companies, their outcome will be hugely influential. Their operations in the AI sector do not.
The current deal marks what seems to be the end of nearly a year of negotiations between OpenAI and Microsoft. Both parties are now working to finalize the contractual terms in a definitive agreement, as emphasized in their joint statement: “We are actively working to finalize contractual terms in a definitive agreement.”
Representatives for the California and Delaware attorneys general declined to comment when reached by TechCrunch on Thursday. Given the regulatory implications of OpenAI’s transition, many in the industry are keenly watching to see what comes next in this complicated narrative.
More and more companies are adopting hybrid models that take both profit and social purpose into consideration. OpenAI’s conversion to a public benefit corporation will soon become an important real-world case study in this trend. It could establish important precedents for how technology companies can successfully and sustainably balance challenging ethical waters to continue fostering innovation.
