Key Takeaways
- OpenAI has confirmed its nonprofit arm will continue to control its for-profit business.
- This decision addresses concerns raised about protecting the company’s charitable mission during a planned structural change.
- CEO Sam Altman reassured employees that the nonprofit’s oversight will remain, despite moving towards a public benefit corporation model.
- The restructuring aims to help OpenAI raise more funds for its advanced AI research and development.
OpenAI, the company behind ChatGPT, announced on Monday that its original nonprofit entity will keep its authority over the company’s rapidly growing for-profit operations. This move comes as OpenAI plans to adjust its corporate structure.
The decision follows calls from a coalition of California nonprofits, foundations, and labor groups for the state’s attorney general to look into OpenAI’s transition. These groups were worried about how the company’s charitable funds would be safeguarded.
In a letter to OpenAI employees, Chief Executive Sam Altman stated, “We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware.”
OpenAI began in 2015 as a nonprofit research lab. It later found huge success developing popular products like ChatGPT and the text-to-video tool Sora. As competition in the AI field intensified, OpenAI felt a need to change its structure to attract more investment.
The startup recently secured $40 billion, pushing its valuation to $300 billion, according to the Los Angeles Times. However, some of this funding depended on the company shifting its corporate framework by the end of the year.
OpenAI faced pushback on its transition plans from Meta and philanthropic leaders, including the San Francisco Foundation, which voiced concerns to the state attorney general. The company was also sued by its co-founder Elon Musk.
Despite Monday’s announcement, the San Francisco Foundation indicated it still has reservations. “While we are glad to see that OpenAI is responding to the questions that have been raised… its announcement today doesn’t address the fundamental problem at issue: the independence from profit-seeking of the OpenAI nonprofit,” said Fred Blackwell, CEO of the foundation.
Last month, OpenAI appointed nonprofit commissioners, such as labor leader Dolores Huerta, to help strengthen its charitable work. The company said it will proceed with its public benefit corporation plan while continuing discussions with its investor Microsoft, civic leaders, the attorneys general’s offices, and the new nonprofit commissioners.
This announcement clarifies earlier plans from December, where it was stated the public benefit corporation would “run and control OpenAI’s operations and business.”
On Monday, Altman explained that the nonprofit board will become a “big shareholder” in the public benefit corporation. This stake, supported by independent financial advisors, aims to give the nonprofit resources for programs ensuring AI benefits diverse communities, aligning with its mission.
Altman firmly committed to the nonprofit’s ongoing control over the for-profit business, stating, “That will not change.” Other AI startups, like Anthropic and Musk’s xAI, are also structured as public benefit corporations.
