Microsoft and OpenAI sign a new agreement as OpenAI recapitalises

Background

The partnership had already gone through several phases, each adding investment and changing the terms of cloud access and model rights. By late 2025 OpenAI was preparing to change its corporate structure, and the partnership terms had to be rewritten to match.

What happened

On 28 October 2025 Microsoft and OpenAI announced a new definitive agreement. It was announced alongside OpenAI's recapitalisation into a public benefit corporation, OpenAI Group PBC.^[1][2]

Microsoft's stake is about 27% on an as-converted diluted basis, valued at roughly $135 billion. Before OpenAI's recent funding rounds, Microsoft had held 32.5% of the for-profit entity.^[1]

Key details

Any declaration of AGI by OpenAI must now be verified by an independent expert panel.^[1]

Microsoft's IP rights to OpenAI models and products run through 2032 and include post-AGI models. Rights to research IP last until AGI is verified or through 2030, whichever comes first.^[1]

OpenAI contracted to purchase an incremental $250 billion of Azure services. In return, Microsoft gave up its right of first refusal to be OpenAI's compute provider.^[1]

Azure API exclusivity continues until AGI. OpenAI may run non-API products on any cloud and may release open-weight models that meet capability criteria.^[1]

Microsoft may now pursue AGI independently or with third parties. The revenue share continues until AGI is verified, with payments spread over a longer period.^[1]

Impact

The agreement changed Microsoft's position from a single preferred partner into a major shareholder with defined rights. It separated the ownership, IP and cloud questions that the earlier deals had combined, and it gave both companies room to work with other partners while keeping Azure central to OpenAI's API business.^[1][2]

Why the structure changed

OpenAI began as a non-profit research organisation, and the restructuring into a public benefit corporation changed the legal form in which its commercial business was held. A public benefit corporation is a company that is allowed to pursue profit alongside a stated public purpose. The new structure therefore had to define who owned the commercial business, how that business could use its partners' technology, and how a claim that AGI had been reached would be judged. The October 2025 agreement addressed each of these points.^[1][2]

Reading the numbers

Percentages on an as-converted diluted basis show what a shareholder would own if all convertible instruments were converted into ordinary shares, so the figure is a comparison basis rather than a count of current shares. The valuation of the stake depends on the company's valuation at the time of the announcement, and it is a snapshot rather than a fixed price.^[1]

Why it matters

The agreement separated the questions of ownership, intellectual property and cloud purchases that the earlier deals had combined. It also set out procedures for AGI, a term without a single agreed definition, by requiring an independent panel to verify any claim. Readers comparing this entry with the later amendment in this archive can see how these terms were revised again.^[1][2]