Microsoft and OpenAI have reached a new agreement that could pave the way for OpenAI’s eventual initial public offering (IPO). As the AI startup, recently valued at $500 billion, works to restructure its business model, the evolving relationship with Microsoft has been a key factor in its path toward going public. Since 2019, Microsoft has invested $13 billion in OpenAI and has shared in the revenue generated by products like ChatGPT and its API. However, the partnership has grown more complex over time. Microsoft now views OpenAI as a competitor in certain areas, allows OpenAI to use other cloud providers for computing resources, and has begun to rely more heavily on its own AI models. In a company-wide town hall on Thursday, Microsoft CEO Satya Nadella and AI chief Mustafa Suleyman reaffirmed the company’s commitment to investing significantly in its in-house AI capabilities. “We should have the capacity to build world-class frontier models of all sizes, but we should be very pragmatic and use other models where we need to,” Suleyman said. A key detail from OpenAI’s announcement is that its nonprofit parent organization will retain control over the for-profit arm of the business. The nonprofit holds an equity stake valued at more than $100 billion, ensuring continued oversight of OpenAI’s mission and safety standards. Despite this progress, OpenAI’s restructuring plan has drawn scrutiny. Several philanthropies and nonprofit groups have expressed concerns about the company’s governance model. Additionally, the attorneys general of California and Delaware have launched investigations into the changes. In response, OpenAI stated it is actively engaging with both state attorneys general as part of its effort to strengthen its governance. “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,” the company said.