Will Microsoft (MSFT) Part Ways With OpenAI?

Microsoft Corporation (NASDAQ:MSFT) is one of the 12 Best Stocks to Buy and Hold for the Long Term. On June 19, the Financial Times reported the long-standing partnership between Microsoft Corporation (NASDAQ:MSFT) and OpenAI might come to an end as tensions persist between the two on key issues including the future stake of MSFT in OpenAI.

The partnership between the two began in 2019 with Microsoft Corporation (NASDAQ:MSFT)’s $1 billion investment in OpenAI. Under the partnership, Microsoft is entitled to 49% of OpenAI Global LLC’s profits, capped at roughly 10 times its investment. OpenAI operates as a “capped profit” company, meaning investor returns are limited beyond a certain threshold.

Microsoft Corporation (NASDAQ:MSFT) has invested more than $13 billion to date and has played a key role in positioning the company as a market leader. However, the tensions have revolved around the future stake of MSFT in OpenAI. According to the Financial Times, the discussion regarding the stakes has ranged from 20% to 49%, however, no decision has been reached yet.

OpenAI requires approval from Microsoft Corporation (NASDAQ:MSFT) to complete its transition as a public benefit corporation. On the other hand, Microsoft plans to keep its existing commercial contract until 2030. The WSJ also reported that both companies are discussing the existing terms of Microsoft’s investment and the future stake.

“We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come” said Microsoft Corporation (NASDAQ:MSFT) and OpenAi in a joint statement.

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