Microsoft is reportedly considering pulling out of its ongoing negotiations with OpenAI, as discussions over a long-term strategic alignment have reached a critical point. The talks, centred around OpenAI's transition from a non-profit to a for-profit entity, remain unresolved, with key sticking points threatening to derail the partnership.

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Profit Push Triggers Uncertainty

At the heart of the impasse lies OpenAI’s push to restructure into a conventional for-profit company. The transformation is essential for the AI startup to attract broader funding and eventually pursue a public listing. But for that to happen, Microsoft—OpenAI’s most significant backer with over $13 billion invested—must greenlight the shift by the end of this year. Without Microsoft’s support, OpenAI could lose billions in expected funding from other major investors, including SoftBank.

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Debate Over Microsoft's Stake

Central to the dispute is the size of Microsoft's future equity in the newly restructured OpenAI. According to sources familiar with the matter, the two sides have been locked in negotiations for months, with Microsoft's stake proposed to fall somewhere between 20% and 49%. However, no consensus has been reached. Faced with these deadlocks, Microsoft is reportedly evaluating whether it should walk away from the high-stakes talks altogether. If a deal cannot be reached, the tech giant may choose to lean on its existing contractual agreement, which secures access to OpenAI’s technology through 2030—unless a more favourable offer emerges.