Microsoft and OpenAI have entered a new phase of their long-standing partnership, signing a definitive agreement that deepens their collaboration and redefines their relationship in the era of advanced artificial intelligence. The deal follows OpenAI's decision to restructure as a public benefit corporation (PBC), a move backed by Microsoft, which now holds an investment in OpenAI Group PBC valued at approximately USD 135 billion, representing about 27 percent on an as-converted diluted basis. Before OpenAI's recent funding rounds, Microsoft's stake stood at 32.5 percent on an as-converted basis in the OpenAI for-profit, according to a joint announcement by Microsoft and OpenAI on October 28, 2025.
Core Partnership Pillars Remain Intact
The agreement preserves the core pillars that have driven the partnership since its inception in 2019—Microsoft remains OpenAI's exclusive partner for frontier AI models and continues to hold exclusive rights for Azure API services until the achievement of Artificial General Intelligence (AGI). However, the new terms introduce greater flexibility for both organizations while ensuring continued cooperation and alignment on safety and innovation.
New Flexibility and Independent Oversight
Under the updated framework, any declaration of AGI by OpenAI will now be verified by an independent expert panel, adding external oversight to a milestone that could reshape the industry. Microsoft's intellectual property rights for both models and products have been extended through 2032, covering post-AGI systems under agreed safety guardrails. Rights to OpenAI's confidential research methods will remain in place until either AGI verification or 2030, while Microsoft retains non-research IP such as deployment and infrastructure-related technologies. OpenAI's consumer hardware is explicitly excluded from Microsoft's IP rights.
Intellectual Property and Cloud Rights
OpenAI will now have greater latitude to collaborate with third parties, with Azure exclusivity applying only to API-based products, while non-API offerings may operate across other cloud providers. Microsoft, meanwhile, gains the right to pursue AGI independently or in partnership with other entities. Any use of OpenAI's IP by Microsoft before AGI is declared will be subject to defined compute thresholds, ensuring responsible use of shared technologies.
Financial Commitments and Future Cooperation
Financially, OpenAI has committed to purchase an additional USD 250 billion in Azure cloud services, though Microsoft will no longer hold the right of first refusal for future compute contracts. The existing revenue-sharing agreement will continue until AGI is verified but will be paid out over a longer timeline.
"OpenAI has contracted to purchase an incremental USD 250B of Azure services, and Microsoft will no longer have a right of first refusal to be OpenAI's compute provider," the official release said.
New Provisions for Government and Open Models
In a significant shift, OpenAI can now offer API access to US government national security customers regardless of cloud provider, and may also release open-weight models that meet specific safety and capability standards.
In a separate announcement, OpenAI said it had completed its recapitalization, simplifying its corporate structure. "The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives," the orignization stated.
"The nonprofit, now called the OpenAI Foundation, holds equity in the for-profit currently valued at approximately USD 130 billion, making it one of the best resourced philanthropic organizations ever. The recapitalization also grants the Foundation additional ownership as OpenAI's for-profit reaches a valuation milestone," the official release said.
Focus: Health and AI Resilience
The OpenAI Foundation will initially focus on a USD 25 billion commitment across two areas:
1. Health and curing diseases. The OpenAI Foundation will fund work to accelerate health breakthroughs so everyone can benefit from faster diagnostics, better treatments, and cures. This will start with activities like the creation of open-sourced and responsibly built frontier health datasets, and funding for scientists.
2. Technical solutions to AI resilience. Just as the internet required a comprehensive cybersecurity ecosystem—protecting power grids, hospitals, banks, governments, companies, and individuals—we now need a parallel resilience layer for AI. The OpenAI Foundation will devote resources to support practical technical solutions for AI resilience, which is about maximizing AI's benefits and minimizing its risks.
According to OpenAI, this initiative builds on the USD 50 million People-First AI Fund and the recommendations of the Nonprofit Commission.
"OpenAI was founded in 2015 as a nonprofit; its mission is to ensure artificial general intelligence benefits all of humanity. Today, OpenAI remains a nonprofit dedicated to that same mission," the official release said.
Going forward, "the OpenAI Foundation and OpenAI Group will work in concert to advance solutions to hard problems and opportunities posed by AI progress. This includes making intelligence a tool that everyone can benefit from, building safe and aligned systems, turbocharging scientific discovery, and strengthening global cooperation and resilience."
