Open AI now reaching a tentative agreement with Microsoft, bringing it one step closer to its long-awaited for-profit shift,

unlocking hundreds of billions of dollars in funding and paving the way to an eventual IPO.

McKenzie Sagalas has the details in today's tech check. I can't keep track of the latest with Microsoft and Open AI.

That's because these negotiations have been going on for a year now, Sarah.

Open AI and its biggest partner and backer Microsoft, though,

finally striking a tentative truce to continue their partnership.

Now, the deal clears a major bottleneck in Open AI's restructuring,

converting Microsoft's startup investment into conventional equity

while granting OpenAI's nonprofit arm a $100 billion stake.

The agreement also underscores their uneasy interdependence.

Even as Microsoft flexed leverage by reportedly testing Anthropics models and developing its own,

it still needs OpenAI's

tech to power Azure and co-pilot. Protecting Azure's dominance is also critical here. Last

quarter's blowout results and massive backlog coincided with serving OpenAI's compute needs.

It's also set to hold a third of OpenAI's equity, so remains vested in their success.

And then for OpenAI, converting to a public benefit corporation sets up an eventual IPO,

and it unlocks billions of dollars, which is cash that it needs to fund massive compute deals,

like that $300 billion cloud packed with Oracle.

Now, an investor on OpenAI's cap table telling me that Oracle, that Oracle move was widely

read as a snub to Azure, raising the stakes in negotiations.

Now remember, Open AI was the one that was up against the deadline here.

And because Microsoft's recapitalization was seen as a big give, the expectation now is it will soon

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