OpenAI's IPO Ambitions Hang In The Balance As Microsoft Negotiates Equity: Report
OpenAI is reportedly in high-stakes negotiations with Microsoft Corporation (NASDAQ:MSFT) to revise the terms of their multibillion-dollar partnership.
What Happened: A key sticking point of the negotiation is how much equity Microsoft will receive in the restructured OpenAI entity in exchange for its more than $13 billion investment to date, reported the Financial Times, citing multiple sources.
Talks also involve revising an existing contract, signed when Microsoft first invested $1 billion in 2019, that governs access to OpenAI's intellectual property and outlines a revenue-sharing arrangement.
As per the report, Microsoft may be willing to relinquish some of its equity in exchange for extended access to OpenAI's future technologies beyond 2030, when the current agreement expires.
Why It's Important: Last week, it was reported that OpenAI plans to cut the revenue share it pays to Microsoft by at least half by 2030.
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OpenAI has also named Instacart CEO Fidji Simo to the newly established position of CEO of Applications, where she will report directly to Sam Altman, as the AI giant reshapes its leadership in anticipation of future advancements in artificial intelligence.
Price Action: Per Benzinga Pro, Microsoft shares have risen 1.35% over the past five days.
According to Benzinga Edge Stock Rankings, MSFT holds a strong growth score of 65.30%, highlighting its solid market momentum. Click here to see how it stacks up against other top-performing stocks.
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