OpenAI has officially completed a significant recapitalization process, transforming its corporate structure into a complex arrangement where a for-profit entity is nested within a non-profit foundation. This restructuring, which resolves a protracted legal and corporate evolution and faced resistance from estranged co-founder Elon Musk, aims to solidify the non-profit's control over the commercial operations while enabling ambitious fundraising and strategic partnerships.

Under the new framework, the non-profit OpenAI Foundation will exert legal control over the for-profit Public Benefit Corporation (PBC) now named OpenAI Group PBC. The Foundation holds a substantial equity stake in the commercial arm, valued at approximately $130 billion to $135 billion, which is designed to grow with the PBC's success. This stake will serve as a direct funding mechanism for the Foundation's original mission, with an initial commitment of $25 billion towards global health and AI resilience initiatives. The PBC is legally bound to the non-profit's mission, ensuring mission-focused governance remains paramount in the industry. The Foundation also maintains the crucial power to appoint and remove the board of directors for the OpenAI Group PBC.

The recapitalization also ushers in a redefined partnership with Microsoft, a long-standing investor. Microsoft's investment is now valued at $135 billion, translating to roughly a 27 percent stake in the OpenAI Group PBC, a slight dilution from its previous 32.5 percent reflecting recent funding rounds. While Microsoft retains its core position as the exclusive Azure API provider for OpenAI's frontier models, this exclusivity now has a crucial condition: it will last only until Artificial General Intelligence (AGI) is achieved. A significant update to the governance of the partnership mandates that any declaration of AGI by OpenAI must be verified by an independent expert panel, a critical external check on the path to advanced AI.

Furthermore, Microsoft's intellectual property rights have been extended through 2032 and now encompass models developed even after AGI is declared, with appropriate safety guardrails. The new agreement grants Microsoft the flexibility to independently pursue AGI, either alone or with other partners, providing it a separate pathway from its reliance on OpenAI's research. Conversely, OpenAI has also secured new flexibilities. While it has committed to purchasing an incremental $250 billion of Azure services, Microsoft no longer holds a right of first refusal as its compute provider, giving OpenAI increased leverage in infrastructure negotiations. OpenAI can now also release open-weight models that meet specific criteria and serve US government national security customers on any cloud. It also gains the ability to jointly develop some non-API products with third parties, though API products developed with others must remain on Azure. Notably, Microsoft's IP rights explicitly exclude any of OpenAI's future consumer hardware. The existing revenue share agreement between the companies will remain in place until the expert panel verifies AGI, though payments will be stretched over a longer period.

The restructuring received crucial regulatory approval from the Attorneys General of California and Delaware, where OpenAI is headquartered and incorporated, respectively. After nearly a year of