Key Takeaways
- OpenAI has reversed its decision to become a fully for-profit company.
- The original non-profit organization anization will maintain control over OpenAI’s operations.
- OpenAI’s for-profit LLC will be restructured into a Public Benefit Corporation (PBC).
- The non-profit will be a major shareholder and guide the PBC, ensuring it aligns with a core mission.
- This change follows extensive discussions with community leaders and state Attorneys General.
OpenAI, the influential company behind ChatGPT, has decided to shelve its plans to become a for-profit corporation.
Instead, the non-profit organization that originally founded OpenAI will continue to steer the company’s direction.
The initial proposal to shift to a for-profit model, announced in December 2024, was driven by the need to raise significant funds for costly artificial general intelligence (AGI) development.
Now, OpenAI is opting for a different approach. Its for-profit limited liability company (LLC) will convert into a Public Benefit Corporation (PBC). A PBC is a U.S. company type that is accountable to both its shareholders and a specific public-benefit mission.
The founding OpenAI non-profit will retain control over this new PBC and will also be one of its largest shareholders, ensuring the company stays true to its mission.
OpenAI stated this decision came after listening to community feedback and engaging in constructive dialogue with the Attorneys General of Delaware and California.
Established in 2015 as a non-profit, OpenAI faced considerable criticism for its proposed move towards a for-profit structure. Critics included co-founder Elon Musk, who has initiated legal action against OpenAI for allegedly deviating from its founding goal of developing AI for humanity’s benefit. Other critics included former employees, various non-profit groups, Nobel laureates, and law professors.
According to PCWorld, which cited TechCrunch, there were reports that OpenAI needed to complete its for-profit switch soon to avoid risking recently raised capital.
It remains uncertain what, if any, financial repercussions OpenAI might face for abandoning these for-profit conversion plans.
