Business

As OpenAI restructures, Microsoft locks in long-term gains

Published

3 months ago

October 28, 2025

Hello and welcome to Eye on AI…In this edition: OpenAI’s new deal with Microsoft…Elon Musk launches Grokipedia…data engineers struggle with AI workloads...and are AI browsers a security risk?

Hello, Beatrice Nolan here, filling in for Jeremy Kahn, who is traveling back from the Fortune Global Forum in Riyadh today. In big AI news, OpenAI and Microsoft announced that they had reached an agreement on the future of their partnership that allows OpenAI to complete a long-awaited corporate restructuring.

The arrangement converts OpenAI’s previous for-profit arm into a public benefit corporation that can issue traditional equity and will give shareholders a potentially more prominent voice in OpenAI’s governance—two changes that were seen as critical for OpenAI to continue to raise the billions of dollars of capital it will need to build more advanced AI models, construct massive datacenters, and continue its push to become a key technology platform for consumers and enterprises.

Under the deal, the new OpenAI Group PBC will remain controlled by the nonprofit OpenAI Foundation. The nearly year-long negotiations with Microsoft, which reportedly caused significant tension between the two companies, had been OpenAI’s main obstacle to completing the restructuring. And at first glance, Microsoft appears to have extracted significant concessions from the AI lab.

The tech giant—which has poured more than $13 billion into OpenAI since 2019—will take a 27% stake in the AI lab, which will be valued at about $135 billion. It will also retain access to OpenAI’s technology through 2032, including any models that reach the milestone of artificial general intelligence (AGI). Whether models have passed this threshold—which OpenAI had previously defined publicly as an AI system capable of performing most economically-valuable cognitive tasks as well or better than a human—will also now be verified by an independent expert panel.

Previously, OpenAI alone could decide when AGI had been reached, which was seen as a possible leverage point to end or change Microsoft’s rights under their partnership. This arrangement reportedly raised tensions, with Microsoft reportedly worried that OpenAI could prematurely declare AGI, using a high-performing AI model as the milestone, which would have major financial and IP implications for both companies. So this decision independent panel is a win for Microsoft.

The deal also lets Microsoft pursue AGI independently, or with third parties, while still requiring OpenAI to share many of its research techniques and breakthroughs. Under the new deal, Microsoft retains access to much of OpenAI’s underlying research methods and systems, although the company will not have access to OpenAI’s consumer hardware, or the model weights and core architectural details of any models considered “research.” (It will retain rights to these key technical details for OpenAI’s production models until 2032.)

Still, this gives Microsoft visibility into things like OpenAI’s model training infrastructure and optimization methods, along with the opportunity to take what it’s learned from OpenAI’s research methods and apply that knowledge to develop its own AGI models. Potentially complicating this further is Microsoft’s expanding partnership with Anthropic, with Claude now available in Microsoft 365 and Excel.

Microsoft did give up its cloud exclusivity with OpenAI, which technology analyst Zeus Kerravala called a “major concession on its part.” However, he also noted that the company had secured several critical, structural concessions from OpenAI in return that outweighed this.

“These concessions ensure the longevity and value of Microsoft’s investment,” he told Fortune. “Essentially, Microsoft traded cloud compute exclusivity, something it was struggling to meet anyway, for technological certainty and long-term IP access.”

Investors seemed to agree as the company’s stock rose 2%, pushing its market valuation past the $4 trillion mark again the day before the company reports its Q3 earnings.

A regulatory win for OpenAI

For its part, OpenAI will now have access to the full funding promised by investors, including SoftBank, Thrive, and other venture capital firms that had been contingent on the restructure. The move also positions OpenAI to raise additional capital more easily in the future.

The company also appears to have cleared a critical regulatory hurdle. Following the news of the deal, the Attorney General of Delaware, Kathy Jennings, announced that her office has issued a “Statement of No Objection” to the proposed corporate recapitalization.

The Attorney General of California, Rob Bonta, told Fortune in a statement that it had “secured concessions that ensure charitable assets are used for their intended purpose, safety will be prioritized, as well as a commitment that OpenAI will remain right here in California.” As a result, Bonta said his office would “not be in court opposing OpenAI’s recapitalization plan.”

This is a blow for several nonprofits that have been campaigning against the restructuring, arguing that OpenAI had drifted from its core mission of developing AGI in a way that “benefitted all humanity” and that it had prioritized shipping products over AI safety.

These non-profit groups had been lobbying the Attorney Generals’ offices to block the deal. Advocacy groups, nonprofits, and some former OpenAI employees, as well as OpenAI co-founder-turned-bitter-commercial-rival Elon Musk, have openly opposed the restructuring on various ground. Musk has argued that the move is evidence that OpenAI CEO Sam Altman and cofounder Greg Brockman deceived him when he made the initial multi-million dollar donations that established the lab. Others have argued that the restructuring risks channeling profits that should have had a charitable public purpose into the pockets of OpenAI’s venture investors, cofounders, and employees. (OpenAI has tried to dampen some of these objections by pledging that its non-profit OpenAI Foundation will make large grants for charitable purposes, including a just-announced $25 billion commitment to projects that aim to improve health and cure diseases or that aim to increase societal resilience to some of the disruptions AI is likely to cause, including potential widespread job loss.)

Nonetheless, with regulatory approval secured and Microsoft’s concerns addressed, OpenAI finally has its for-profit structure—and billions of dollars in capital. And Microsoft keeps most of what it found valuable in the OpenAI partnership, while securing a big equity stake that could prove a windfall for its own shareholders.

With that, here’s more AI news.

Beatrice Nolan

bea.nolan@fortune.com

FORTUNE ON AI

Open-source AI is ‘China’s game right now’—and that’s a problem for the U.S. and its allies, Andreessen Horowitz partner says — Beatrice Nolan

Now we know that AI won’t take all of our jobs, Silicon Valley has to fix its fundamental mistake: Automation theater has to end — Joel Hron

Qualcomm CEO warns that ‘everybody’s playing to win’ when it comes to an AI bubble—but it’s still too early to tell who will succeed — Beatrice Nolan

After Microsoft invested $13 billion into OpenAI, its AI chief is slamming erotica features like ChatGPT’s: ‘This is very dangerous’ — Sasha Rogelberg

EYE ON AI NEWS

Elon Musk launches Grokipedia as a new rival to Wikipedia. Elon Musk has touted his new venture, Grokipedia, an AI-driven encyclopedia, as an unbiased alternative to Wikipedia. Early pages resemble Wikipedia’s format but, according to the Washington Post, are presented with a more right-leaning tone. The outlet also identified multiple factual errors. Musk has raised issues with Wikipedia before, publicly calling out what he considers the site’s leftward shift. The site, which launched this week, currently hosts around 885,000 articles, far less than Wikipedia’s more than 8 million. Read more in the Washington Post.

Claude adds Excel integration and real-time market data tools. Anthropic has rolled out a finance-focused upgrade for its Claude chatbot, adding direct integration with Microsoft Excel and seven new real-time data connectors. Anthropic’s Claude can now analyze, edit, and generate spreadsheets directly within Excel, offering financial professionals a more interactive way to work with data. The new connectors link Claude to key financial platforms—including Moody’s, the London Stock Exchange Group, and MT Newswires—allowing it to access live market updates, earnings call transcripts, and investment research. Anthropic also introduced six new “Agent Skills” tailored to finance, enabling Claude to produce reports, model cash flows, and generate company profiles automatically. Read more here.

Qualcomm enters AI chip race with data center processors. Qualcomm has announced a major move into the AI data center market with two new accelerator chips designed to challenge Nvidia and AMD’s dominance. The chips, designed to power AI inference rather than training, can fill a full, liquid-cooled server rack and are built on Qualcomm’s Hexagon neural processing units, which are used in its smartphone chips. With demand for AI computing expected to drive up to $6.7 trillion in data center spending through 2030, Qualcomm’s entry marks a significant expansion beyond its traditional mobile chip business. Shares of Qualcomm surged 11% following the announcement. Read more in CNBC.

OpenAI urges U.S. to boost energy output to stay ahead in AI race. OpenAI is calling on the U.S. government to dramatically expand national energy production, warning that the country risks falling behind China in the global AI race without massive new power investments. In an 11-page submission to the White House Office of Science and Technology Policy, the company urged the U.S. to commit to building 100 gigawatts of new energy capacity each year — nearly double what the nation added in 2024. OpenAI noted that China added 429 gigawatts last year compared with the U.S.’s 51 gigawatts, creating what it called an emerging “electron gap.” Read more in CNBC.

EYE ON AI RESEARCH

Another MIT report says the benefits of AI may not be as clear cut as forecast. This time in coding. A new MIT Technology Review Insights report, conducted in collaboration with Snowflake, has found that 77% of data engineers are facing heavier workloads despite the widespread adoption of AI tools meant to boost productivity. The survey of 400 senior technology executives found that 83% of organizations have already deployed AI-based data engineering tools, but 45% cite integration complexity and 38% report tool sprawl and fragmentation as major adoption challenges. While AI is automating many data tasks, the proliferation of disconnected systems has created a productivity paradox where individual tasks are faster, but overall workflows are slower, according to the report. Data engineers now spend 37% of their time on AI-related projects, up from 19% two years ago, and expect that to reach 61% within two years.

AI CALENDAR

Nov. 10-13: Web Summit, Lisbon.

Nov. 26-27: World AI Congress, London.

Dec. 2-7: NeurIPS, San Diego.

Dec. 8-9: Fortune Brainstorm AI San Francisco. Apply to attend here.

BRAIN FOOD

Are AI web browsers a security risk? After OpenAI launched its much-anticipated web browser last week, I wrote about some of the risks around prompt injections. Since then, perhaps unsurprisingly, more security risks have emerged. Security firm LayerX discovered a potentially major vulnerability in the ChatGPT Atlas browser that allows attackers to inject malicious instructions into ChatGPT’s memory. Using a Cross-Site Request Forgery (CSRF) attack, hackers can exploit a logged-in user’s session to implant hidden instructions that persist across devices and browsers. Once infected, ChatGPT may unknowingly execute these instructions, potentially deploying malware. LayerX’s tests showed that the ChatGPT Atlas browser is especially vulnerable, blocking only about 5.8% of phishing attacks they tested, making users up to 90% more exposed compared to Chrome or Edge, which blocked roughly half of such attacks. Cybersecurity is always somewhat of a cat and mouse game, with companies identifying and then patching security flaws, but the scale of the security risks begs the question if AI browsers are just too risky to trust with the kind of deep system access they require to be useful.

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Business

Gates Foundation, OpenAI unveil $50 million ‘Horizon1000’ initiative to boost healthcare in Africa through AI

Published

5 hours ago

January 21, 2026

Jace Porter

In a major effort to close the global health equity gap, the Gates Foundation and OpenAI are partnering on “Horizon1000,” a collaborative initiative designed to integrate artificial intelligence into healthcare systems across Sub-Saharan Africa. Backed by a joint $50 million commitment in funding, technology, and technical support, the partnership aims to equip 1,000 primary healthcare clinics with AI tools by 2028, Bill Gates announced in a statement on his Gates Notes, where he detailed how he sees AI playing out as a “gamechanger” for expanding access to quality care.

The initiative will begin operations in Rwanda, working directly with African leaders to pioneer the deployment of AI in health settings. With a core principle of the Foundation being to ensure that people in developing regions do not have to wait decades for new technologies to reach them, the goal in this partnership is to reach 1,000 primary health care clinics and their surrounding communities by 2028.

“A few years ago, I wrote that the rise of artificial intelligence would mark a technological revolution as far-reaching for humanity as microprocessors, PCs, mobile phones, and the Internet,” Gates wrote. “Everything I’ve seen since then confirms my view that we are on the cusp of a breathtaking global transformation.”

Addressing a Critical Workforce Shortage

The impetus for Horizon1000, Gates said, is a desperate and persistent shortage of healthcare workers in poorer regions, a bottleneck that threatens to stall 25 years of progress in global health. While child mortality has been halved and diseases like polio and HIV are under better control, the lack of personnel remains a critical vulnerability.

Sub-Saharan Africa currently faces a shortfall of nearly 6 million healthcare workers, ” a gap so large that even the most aggressive hiring and training efforts can’t close it in the foreseeable future.” This deficit creates an untenable situation where overwhelmed staff must triage high volumes of patients without sufficient administrative support or modern clinical guidance. The consequences are severe: the World Health Organization (WHO) estimates that low-quality care is a contributing factor in 6 million to 8 million deaths annually in low- and middle-income countries.

Rwanda, the first beneficiary of the Horizon1000 initiative, illustrates the scale of the challenge. The nation currently has only one healthcare worker per 1,000 people, significantly below the WHO recommendation of four per 1,000. Gates noted that at the current pace of hiring and training, it would take 180 years to close that gap. “As part of the Horizon1000 initiative, we aim to accelerate the adoption of AI tools across primary care clinics, within communities, and in people’s homes,” Gates wrote. “These AI tools will support health workers, not replace them.”

AI as the ‘Third Major Discovery‘

Gates noted comments from Rwanda’s Minister of Health Dr. Sabin Nsanzimana, who recently announced the launch of an AI-powered Health Intelligence Center in Kigali. Nsanzimana described AI as the third major discovery to transform medicine, following vaccines and antibiotics, Gates noted, saying that he agrees with this view. “If you live in a wealthier country and have seen a doctor recently, you may have already seen how AI is making life easier for health care workers,” Gates wrote. “Instead of taking notes constantly, they can now spend more time talking directly to you about your health, while AI transcribes and summarizes the visit.”

In countries with severe infrastructure limitations, he wrote, these capabilities will foster systems that help solve “generational challenges” that were previously unaddressable.

As the initiative rolls out over the next few years, the Gates Foundation plans to collaborate closely with innovators and governments in Sub-Saharan Africa. Gates wrote that he himself plans to visit the region soon to see these AI solutions in action, maintaining a focus on how technology can meet the most urgent needs of billions in low- and middle-income countries.

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Business

On Netflix’s earnings call, co-CEOs can’t quell fears about the Warner Bros. bid

Published

7 hours ago

January 20, 2026

Jace Porter

When it comes to creating irresistible storylines, Netflix, the home of Stranger Things and The Crown, is second to none. And as the streaming video giant delivered its quarterly earnings report on Tuesday, executives were in top storytelling form, pitching what they promise will be a smash hit: the acquisition of Warner Brothers Discovery.

The company’s co-CEOs, Ted Sarandos and Greg Peters, said the deal, which values Warner Brothers Discovery at $83 billion, will accelerate its own core streaming business while helping it expand into TV and the theatrical film business.

“This is an exciting time in the business. Lots of innovation, lots of competition,” Sarandos enthused on Tuesday’s earnings conference call. Netflix has a history of successful transformation and of pivoting opportunistically, he reminded the audience: Once upon a time, its main business entailed mailing DVDs in red envelopes to customers’ homes.

Despite Sarandos’ confident delivery, however, the pitch didn’t land with investors. The company’s stock, which was already down 15% since Netflix announced the deal in early December, sank another 4.9% in after-hours trading on Tuesday.

Netflix’s financial results for the final quarter of 2025 were fine. The company beat EPS expectations by a penny, and said it now has 325 million paid subscribers and a worldwide total audience nearing 1 billion. Its 2026 revenue outlook, of between $50.7 billion and $51.7 billion, was right on target.

Still, investors are worried that the Warner Bros. deal will force Netflix to compete outside its lane, causing management to lose focus. The fact that Netflix will temporarily halt its share buybacks in order to accumulate cash to help finance the deal, as it disclosed towards the bottom of Tuesday’s shareholder letter, probably didn’t help matters.

And given that there’s a rival offer for Warner Bros from Paramount Skydance, it’s not unreasonable for investors to worry that Netflix may be forced into an expensive bidding war. (Even though Warner Brothers Discovery has accepted the Netflix offer over Paramount’s, no one believes the story is over—not even Netflix, which updated its $27.75 per share offer to all-cash, instead of stock and cash, hours earlier on Tuesday in order to provide WBD shareholders with “greater value certainty.”)

Investors are wary; will regulators balk?

Warner Brothers investors are not the only audience that Netflix needs to win over. The deal must be blessed by antitrust regulators—a prospect whose outcome is harder to predict than ever in the Trump administration.

Sarandos and Peters laid out the case Tuesday for why they believe the deal will get through the regulatory process, framing the deal as a boon for American jobs.

“This is going to allow us to significantly expand our production capacity in the U.S. and to keep investing in original content in the long term, which means more opportunities for creative talent and more jobs,” Sarandos said.

Referring to Warner Brothers’ television and film businesses, he added that “these folks have extensive experience and expertise. We want them to stay on and run those businesses. We’re expanding content creation not collapsing it.”

It’s a compelling story. But the co-CEOs may have neglected to study the most important script of all when it comes to getting government approval in the current administration; they forgot to recite the Trump lines.

The example has been set over the past 12 months by peers such as Nvidia’s Jensen Huang and Meta’s Mark Zuckerberg. The latter, with his company facing various federal regulatory threats, began publicly praising the Trump administration on an earnings call last January.

And Nvidia’s Huang has already seen real dividends from a similar strategy. The chip company CEO has praised Trump repeatedly on earnings calls, in media interviews, and in conference keynote speeches, calling him “America’s unique advantage” in AI. Since then, the U.S. ban on selling Nvidia’s H200 AI chips to China has been rescinded. The praise may have been coincidental to the outcome, but it certainly didn’t hurt.

In contrast, the president went unmentioned on Tuesday’s call. How significant Netflix’s omission of a Trump call-out turns out to be remains to be seen; maybe it won’t matter at all. But it’s worth noting that its competitor for Warner Bros., Paramount Skydance, is helmed by David Ellison, an outspoken Trump supporter.

It’s a storyline that Netflix should have seen coming, and itmay still send the company back to rewrite.

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Americans are paying nearly all of the tariff burden as international exports die down, study finds

Published

9 hours ago

January 20, 2026

Jace Porter

After nearly a year of promises tariffs would boost the U.S. economy while other countries footed the bill, a new study shows almost all of the tariff burden is falling on American consumers.

Americans are paying 96% of the costs of tariffs as prices for goods rise, according to research published Monday by the Kiel Institute for the World Economy, a German think tank.

In April 2025 when President Donald Trump announced his “Liberation Day” tariffs, he claimed: “For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike.” But the report suggests tariffs have actually cost Americans more money.

Trump has long used tariffs as leverage in non-trade political disputes. Over the weekend, Trump renewed his trade war in Europe after Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland sent troops for training exercises in Greenland. The countries will be hit with a 10% tariff starting on Feb. 1 that is set to rise to 25% on June 1, if a deal for the U.S. to buy Greenland is not reached.

On Monday, Trump threatened a 200% tariff on French wine, after French President Emmanuel Macron refused to join Trump’s “Board of Peace” for Gaza, which has a $1 billion buy-in for permanent membership.

“The claim that foreign countries pay these tariffs is a myth,” wrote Julian Hinz, research director at the Kiel Institute and an author of the study. “The data show the opposite: Americans are footing the bill.”

The research shows export prices stayed the same, but the volume has collapsed. After imposing a 50% tariff on India in August, exports to the U.S. dropped 18% to 24%, compared to the European Union, Canada, and Australia. Exporters are redirecting sales to other markets, so they don’t need to cut sales or prices, according to the study.

“There is no such thing as foreigners transferring wealth to the U.S. in the form of tariffs,” Hinz told The Wall Street Journal.

For the study, Hinz and his team analyzed more than 25 million shipment records between January 2024 through November 2025 that were worth nearly $4 trillion.They found exporters absorbed just 4% of the tariff burden and American importers are largely passing on the costs to consumers.

Tariffs have increased customs revenue by $200 billion, but nearly all of that comes from American consumers. The study’s authors likened this to a consumption tax as wealth transfers from consumers and businesses to the U.S. Treasury.

Trump has also repeatedly claimed tariffs would boost American manufacturing, butthe economy has shown declines in manufacturing jobs every month since April 2025, losing 60,000 manufacturing jobs between Liberation Day and November.

The Supreme Court was expected to rule as soon as today on whether Trump’s use of emergency powers to levy tariffs under the International Emergency Economic Powers Act was legal. The court initially announced they planned to rule last week and gave no explanation for the delay.

Although justices appeared skeptical of the administration’s authority during oral arguments in November, economists predict the Trump administration will find alternative ways to keep the tariffs.

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