Microsoft's $1B OpenAI Gambit: From Nonprofit to Tech Empire

Ultimately, it decided to limit its initial investment to $1 billion in the hopes that a smaller investment would "press OpenAI to commercialize," in direct contravention of the nonprofit's stated founding principles. In exchange for its investment, Microsoft received a convertible limited partnership interest and rights to OpenAI's profits, with returns "capped" at 2000% of its $1 billion investment. Microsoft's CFO noted in an internal email that the "cap is actually larger than 90% of public companies," and the limit on Microsoft's profits is not "terribly constraining nor terribly altruistic." It was, in fact, "a good investment." At Microsoft's request, OpenAI agreed to keep any mention of Microsoft's promised 2000% return on its investment out of its public announcement. The second update to Microsoft's partnership with OpenAI in 2021 included another $2 billion investment that wasn't reported and came with a lower upside.