OpenAI has decided to maintain its nonprofit control over ChatGPT and other AI products, reversing its earlier proposal to transition this oversight to a newly created public-benefit corporation. This decision comes amid pushback from stakeholders and the need for regulatory approval from attorney general offices in California and Delaware by early next year. Approval is critical, as it would unlock a potential $30 billion funding round from investors like SoftBank, which is essential for OpenAI to stay competitive in the generative AI space.
Originally established as a nonprofit in 2015 to benefit humanity, OpenAI faced challenges in balancing its idealistic mission with the vast funding necessary for developing its advanced AI systems. Notably, Elon Musk, a cofounder who distanced himself from the organization in 2018, has been vocal against the shift toward greater profit-driven motives, even suing OpenAI for breach of contract over this very issue.
Despite a U.S. federal judge denying Musk’s attempt to halt the restructuring, some of his claims have been allowed to proceed to trial. Former OpenAI staff member Todor Markov expressed disappointment over the change in plans being prompted by public pressure but regarded it as a victory for the public interest.
Microsoft, OpenAI’s largest investor, has the power to veto the restructuring plan and is simultaneously expanding its own AI capabilities. OpenAI stated it looks forward to collaborating with the relevant regulatory bodies and Microsoft to refine the new structure.
The newly proposed model preserves the nonprofit’s control while converting the for-profit subsidiary into a public-benefit corporation, cleverly positioning itself to balance shareholder interests with societal benefits. This model aligns OpenAI more closely with similar competitors in the AI field.
Delaware’s attorney general, Kathy Jennings, expressed optimism regarding OpenAI’s decision to reconsider its corporate structure while agreeing to ensure compliance with state laws on charitable purposes. However, critics, including Robert Weissman of Public Citizen, have flagged potential concerns about the adequacy of restraints on the profit-oriented subsidiary.
As OpenAI aims to provide a more defined structure, it plans for the nonprofit to hold shares in the public-benefit corporation, which has a staggering valuation of $300 billion. This could lead to significant financial resources for the nonprofit, raising questions about the integrity of its philanthropic mission as advocates call for stricter oversight of the proposed changes.
