Key Takeaways
- OpenAI has revised its restructuring plans, deciding to keep its nonprofit parent organization in control.
- The company’s for-profit arm will transition into a Public Benefit Corporation (PBC).
- Despite maintaining nonprofit oversight, OpenAI is proceeding with plans to eliminate capped investor returns.
- This decision follows discussions with civic leaders and Attorneys General, aiming to address concerns about the company’s mission.
OpenAI is adjusting its much-discussed corporate overhaul. The AI research and deployment company will now keep its original nonprofit entity in charge, even as it implements other significant structural changes.
OpenAI CEO Sam Altman shared in a letter that while its for-profit subsidiary will become a Public Benefit Corporation, the nonprofit will maintain ultimate control. OpenAI chairman Bret Taylor echoed this, stating, “OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit.”
This decision to retain nonprofit control, amid a broader restructuring announced previously, was influenced by conversations with civic leaders and the Attorneys General of California and Delaware. Altman confirmed this, saying, “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.”
Previously, there were concerns that shifting primary control to the for-profit arm could weaken governance safeguards, such as maintaining an independent board free from profit incentives and upholding capped returns for investors.
However, the change regarding investor returns is still on the table. OpenAI plans to scrap its complex capped-profit model. “Instead of our current complex capped-profit structure … we are moving to a normal capital structure where everyone has stock,” Altman explained, clarifying it’s a structural simplification, not a sale.
Altman suggested the capped-profit model was suitable when OpenAI seemed like the sole pursuer of artificial general intelligence (AGI). Now, he believes it would hinder the company “in a world of many great AGI companies.”
To ensure the nonprofit remains in control, it will become a significant shareholder in the new Public Benefit Corporation. Altman stated the nonprofit will receive a substantial number of shares, ensuring its resources grow alongside the PBC’s success.
This means a profit incentive will still drive parts of OpenAI, but it will ostensibly be guided by the nonprofit’s leadership through its shareholder position.
Not everyone is fully satisfied with these new plans. Page Hedley, OpenAI’s former policy and ethics advisor, told The Register that the new plan doesn’t clarify if OpenAI’s commercial goals will remain “legally subordinate to its charitable mission,” or who will own new technology developed by OpenAI.
These structural adjustments could also influence the ongoing lawsuit from OpenAI co-founder Elon Musk, who alleges that the company’s move towards a for-profit model breached its original nonprofit commitments.
