OpenAI has completed its controversial for-profit restructuring, accompanied by a new partnership with Microsoft. The collaboration includes plans for consumer hardware and outlines the next steps in the event that artificial general intelligence (AGI) is achieved.

The company’s for-profit division is now known as OpenAI Group PBC, a public benefit corporation. The nonprofit arm, renamed OpenAI Foundation, holds equity in the for-profit entity valued at approximately $130 billion. It will focus on healthcare, disease, and AI resilience with an initial investment of $25 billion. The nonprofit will receive additional ownership as the for-profit attains certain valuation milestones.

After extensive negotiations with the Attorneys General of California and Delaware, OpenAI secured approval for the restructuring. This process was essential for the company to move forward. Moreover, OpenAI resolved a legal dispute with Elon Musk, who co-founded the organization, by adjusting its original plan to retain nonprofit oversight over the company.

One of the key unresolved issues is whether the nonprofit entity will retain control of its technology, particularly concerning the development of AGI. AGI represents a significant milestone that OpenAI and its competitors are striving to achieve, investing heavily in its advancement.

As part of the restructuring, OpenAI entered into a new agreement with Microsoft. The tech giant reduced its ownership stake in OpenAI’s for-profit entity from 32.5% to approximately 27%. This stake, valued at $135 billion, is now held in the public benefit corporation.

The OpenAI-Microsoft deal addressed a major concern regarding Microsoft’s rights to OpenAI’s technology post-AGI. An independent expert panel will now verify the declaration of AGI, ensuring transparency in the process. Microsoft’s intellectual property rights have been extended through 2032, encompassing models post-AGI with safety measures in place.

Microsoft’s IP rights to OpenAI’s research will remain until 2030 or until AGI is confirmed by the expert panel, whichever comes first. This agreement allows Microsoft access to confidential development methods and internal use models. The revenue-sharing arrangement will continue, with payments spread out over a longer period.

However, Microsoft’s IP rights do not cover OpenAI’s consumer hardware, preventing access to the technology behind devices developed in collaboration with Jony Ive. The partnership has also become less exclusive, allowing OpenAI to collaborate with third parties and release open weight models.

Microsoft now has the freedom to independently pursue AGI, either alone or in partnership. The race towards AGI has intensified between the two companies. Any use of OpenAI’s IP by Microsoft for AGI development will be subject to compute thresholds before AGI is officially declared.

If OpenAI had not completed the restructuring by the end of the year, it risked losing a significant portion of its SoftBank investment. The company will conduct a livestream Q&A session with CEO Sam Altman and chief scientist Jakub Pachocki at 1:30pm ET.