Microsoft and OpenAI have entered into a new agreement that may pave the way for an IPO.

As OpenAI revamps its nonprofit framework, it has made strides with Microsoft regarding the 'next phase' of their partnership.

As OpenAI works on restructuring itself with the goal of going public, it faces a challenge due to its increasingly complex partnership with Microsoft, which was recently valued at $500 billion. On Thursday afternoon, both companies issued a joint statement regarding an agreement they have reached.

Since 2019, Microsoft has invested $13 billion in OpenAI and shares in the revenue generated by ChatGPT and its API. Additionally, Microsoft now views OpenAI as a competitor, permits OpenAI to utilize other cloud providers for computing resources, and has begun to rely more on its own AI models.

During a company town hall meeting on Thursday, Microsoft CEO Satya Nadella and AI chief Mustafa Suleyman pledged to make "significant investments" in their own models. Suleyman stated, "We should have the capacity to build world-class frontier models in-house of all sizes, but we should be very pragmatic and use other models where we need to."

OpenAI released another statement detailing one specific aspect of the agreement with Microsoft, indicating that its nonprofit parent company will maintain authority over the for-profit entity, holding an equity stake valued at over $100 billion.

Reports suggest that other philanthropies and nonprofits have expressed concerns regarding OpenAI’s unconventional restructuring plan, and the attorneys general of California and Delaware have initiated investigations. In its announcement, OpenAI remarked, "We continue to work with the California and Delaware Attorneys General as an important part of strengthening our approach, and we remain committed to learning and acting with urgency to ensure our tools are helpful and safe for everyone, while advancing safety as an industry-wide priority."