GoAhead

Microsoft has signed a non-binding memorandum with OpenAI for its next phase
OpenAI may want to go public after it distances itself from Microsoft
It already uses Google and others for compute power

Microsoft and OpenAI have signed a non-binding agreement to restructure OpenAI into a for-profit company.

Details of the agreement have not been confirmed, but OpenAI could ultimately want to go public after raising capital and adopting a more conventional corporate governance model following its huge success in recent years with generative AI.

The news comes after huge investments from Microsoft into the ChatGPT maker, including $1 billion in 2019 and a further huge multibillion-dollar investment in 2023 that later turned out to be worth around $10 billion – around 18% of its total revenue for the second calendar quarter of 2023.

OpenAI to enter its next business phase

“OpenAI and Microsoft have signed a non-binding memorandum of understanding (MOU) for the next phase of our partnership,” OpenAI and Microsoft shared.

“We are actively working to finalize contractual terms in a definitive agreement. Together, we remain focused on delivering the best AI tools for everyone, grounded in our shared commitment to safety.”

Under previous terms, Microsoft had exclusive rights to sell OpenAI’s software via Azure and had preferential access to its technology, but this has since changed. Today, Microsoft is no longer OpenAI’s sole compute provider. In July, we learned that Google Cloud would be joining forces with OpenAI for compute power.

OpenAI is also seeking some degree of independence by reducing reliance on third parties, building out its own data center as part of the $500 billion Project Stargate.

Reuters reporting citing a memo from OpenAI nonprofit board chairman Bret Taylor suggests the nonprofit arm could receive more than $100 billion in funding – about 20% of the $500 billion valuation OpenAI is reportedly seeking in private markets.

However, with regulatory hurdles now standing between OpenAI’s change of structure and its future, quite what the shakeup could mean for the ChatGPT maker remains unclear.

Microsoft’s share price increase peaked at 2.5% in after-hours trading following the announcement, marking investor confidence in its decision to free OpenAI from its reins.

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The U.S. Commodity Futures Trading Commission has freed up prediction market firm Polymarket’s QCX acquisition from certain disclosure and data requirements as the company moves forward in its U.S. business offerings.

QCX, which got its license to start operations in July before it was snatched up later that month by Polymarket, has been granted a “no-action letter” from the CFTC, allowing it to operate in specifically defined ways without drawing enforcement attention. The firm was acquired by Polymarket in hopes of its official return to U.S. business, which it was forced to abandon in 2022 under direction from the regulator.

Polymarket has since emerged from earlier federal investigative interest as the U.S. government has eased its tense relationship with this sector, and companies — also including rival Kalshi — have been given more free rein. The field, as a result, has begun to explode in visibility and usage.

Wednesday’s decision from two relevant divisions within the CFTC — at the staff level and not a commission ruling — “is similar to previous no-action positions taken with respect to reporting certain binary options transactions and similar transactions,” the agency noted. The letter doesn’t explicitly address prediction markets, but it notes its position on the “recordkeeping regulations for event contracts.”

Though he hasn’t been confirmed by the U.S. Senate, yet, President Donald Trump’s nominee to run the CFTC, former Commissioner Brian Quintenz, has close ties to Kalshi as a board member and told lawmakers that the binary event contracts offered at such firms are appropriate “hedging tools.” Even without his arrival, the agency has been taking a friendlier stance, with Acting Chairman Caroline Pham saying the CFTC has let itself get bogged down in a “sinkhole of legal uncertainty” as it pursued legal cases against the industry.

Read More: Robinhood Partners With Kalshi to Launch NFL and College Football Prediction Markets

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OpenAI for-profit restructuring given go-ahead by Microsoft in new non-binding deal

OpenAI to enter its next business phase

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