OpenAI to Maintain Nonprofit Status Amidst External Pressure for Control Retention

OpenAI has announced that its nonprofit organization will maintain control of the company during a restructuring into a public benefit corporation (PBC). This decision came after discussions with civic leaders, former employees, and the attorneys general of California and Delaware.

OpenAI, which has gained significant backing from Microsoft and was recently valued at $300 billion, intends to operate under a new structure where the nonprofit remains the majority stakeholder. Bret Taylor, OpenAI’s board chairman, explained that the company would convert its limited liability subsidiary to a PBC, allowing employees, investors, and the nonprofit to hold equity in the new entity.

While Taylor did not disclose specific details about the nonprofit’s ownership stake, he assured that it would hold a majority interest. CEO Sam Altman expressed his satisfaction with the continuity in mission between the nonprofit and the PBC, confirming that the decision had unanimous support from the board and stakeholders.

This restructuring is taking place amidst a contentious legal battle with co-founder Elon Musk, who opposes the shift towards a for-profit model due to his competitive interests in the generative AI sector with his startup, xAI. Altman acknowledged the media’s focus on Musk but emphasized that OpenAI remains focused on fulfilling its mission.

OpenAI has been commercializing products, notably the ChatGPT chatbot, since its initial launch in late 2022. The potential transition to a for-profit model has faced challenges, particularly from Musk, who previously made a substantial offer to acquire OpenAI.

Concerns have also been raised by a group of former employees and scholars about how the restructuring could impact OpenAI’s charitable purpose and governance. Despite the changes, Taylor reassured that the nonprofit board retains governance authority, ensuring that the mission remains at the forefront of the organization’s goals.

In a letter to employees, Altman reaffirmed OpenAI’s commitment to developing artificial general intelligence (AGI) that benefits humanity, acknowledging the evolving demands and resources required to achieve that mission.