(Bloomberg) — After months of public pressure, OpenAI walked back part of its effort to create a more conventional for-profit company, but its restructuring plans still have not received the blessing of a major stakeholder: Microsoft Corp. (MSFT)
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Microsoft, which has invested $13.75 billion in the startup, remains the biggest holdout among investors as the ChatGPT maker tries to restructure, according to several people familiar with the matter. The software giant wants to make sure that any changes to OpenAI’s structure adequately protect Microsoft’s investment, said the people, who spoke on condition of anonymity to discuss private deliberations. Microsoft is still actively negotiating details of OpenAI’s proposal, the people said.
Microsoft declined to comment. In a statement, OpenAI said: “We continue to work closely with Microsoft, and look forward to finalizing the details of this recapitalization in the near future.”
OpenAI said Monday that it’s moving forward with an effort to restructure its for-profit division as a public benefit corporation, but changed its plans so that the overall business will instead remain under the control of its nonprofit — effectively maintaining the contours of how the company is currently set up.
Microsoft isn’t the only party that OpenAI needs buy-in from. The state attorneys general of California and Delaware are responsible for overseeing the conversion. OpenAI needs to do a fair market valuation on the nonprofit’s stake in the future for-profit entity and is asking state AGs for input.
In a letter to employees, OpenAI Chief Executive Officer Sam Altman said the decision to maintain the nonprofit’s control followed discussions with civic leaders and the offices of the state attorneys general. “We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners,” Altman said.
A simplified for-profit structure is considered more attractive to investors, but on a call with reporters, Altman said the revised approach would still accomplish the same aim — even with the nonprofit in control. With the proposed structure, Altman specifically said SoftBank Group Corp. (9984.T, SFTBY) is prepared to move forward with its full $30 billion investment as part of a recently announced funding round.