OpenAI says its corporate structure must evolve to advance its mission of ensuring that artificial general intelligence (AGI) — AI that may do many of the tasks humans can do — advantages all of humanity.
The company currently has a for-profit organization controlled by a nonprofit organization that gives a “limited share of profits” for investors and employees. But in a single Blog post As disclosed Friday, the corporate plans to start converting its existing for-profit corporation right into a Delaware Public Benefit Corporation (PBC), whose charitable interests include common stock and the OpenAI mission.
These details have been reported elsewhere. In December, The New York Times revealed that OpenAI was negotiating to pay its nonprofit organization billions of dollars to relinquish control. However, it’s the primary time that OpenAI has laid out its proposal in a public memo.
“As we enter 2025, we must turn out to be greater than only a lab and a startup – we must turn out to be a long-lasting company,” OpenAI wrote in its post. “The world is constructing a brand new infrastructure of energy, land use, chips, data centers, data, AI models and AI systems for the twenty first century economy. We wish to evolve to take the following step in our mission.”
According to OpenAI, the creation of the PBC would allow it to “balance shareholder interests, stakeholder interests and public welfare” in its decision-making while “raising the essential capital on traditional terms.” According to OpenAI, this might also create certainly one of the best-resourced nonprofits in history. OpenAI's existing nonprofit entity would receive shares within the PBC “at a good value determined by independent financial advisors.”
“We have a nonprofit and a for-profit organization today, and we are going to proceed to have each,” OpenAI wrote. “Our current structure doesn’t allow the board to directly consider the interests of those that would fund the mission and doesn’t allow the nonprofit to simply do greater than control the for-profit organization. The PBC will manage and control OpenAI’s operations and business, while the nonprofit organization will hire a leadership team and staff to pursue nonprofit initiatives in areas reminiscent of healthcare, education and science.”
OpenAI was founded in 2015 as a non-profit research laboratory. But as its experiments became more capital-intensive, it created its current structure and took on outside investments from VCs and firms, including Microsoft.
In October, OpenAI raised $6.6 billion at a valuation of $157 billion, for a complete raise of $17.9 billion. However, the corporate still expects to lose money this yr – $5 billion. after to CNBC — and the terms of its latest funding round require it to make a for-profit transition inside two years.
The plan faces hurdles.
One of OpenAI's co-founders, billionaire Elon Musk, has filed for an injunction to stop the corporate's transition to a for-profit entity, accusing OpenAI of abandoning its original philanthropic mission. Musk has also alleged that OpenAI deprived his own AI company xAI of capital by making investors promise to not fund it.
OpenAI described Musk's complaints as “unfounded” and merely a case of resentment.
Facebook's parent company and AI rival Meta can also be supporting efforts to dam OpenAI's transition. In December, Meta sent a letter to California Attorney General Rob Bonta arguing that allowing the postponement would have a “seismic impact on Silicon Valley.”
“If OpenAI’s recent business model is valid, nonprofit investors would achieve the identical for-profit advantages as those that spend money on for-profit firms in a conventional manner, while benefiting from government tax write-offs,” Meta wrote within the letter.
OpenAI competitors like xAI and Anthropic are structured as PBCs but would not have a nonprofit component.
OpenAI's current structure ultimately led to the abrupt ouster of CEO Sam Altman last November, much to the dismay of investors, particularly Microsoft. It also gives OpenAI's board of directors the facility to find out exactly when OpenAI has achieved AGI and exempts that AGI from the licensing agreements the startup has with customers.
One of those customers is Microsoft – and Microsoft and OpenAI are said to have a selected, internal financial definition of AGI. According to The Information, the 2 firms signed an agreement last yr stating that OpenAI will only achieve AGI if it develops AI systems that may generate at the least $100 billion in profits.
OpenAI continues to grapple with a drain of high-quality talent, partly on account of concerns that the corporate is prioritizing business products on the expense of security. A former worker, Carroll Wainwright, who worked on aligning AI systems with security policies, wrote in a single post on
In one Series of posts On
“First, there may be surprisingly little discussion of actual governance details, although that is arguably the important thing issue,” Brundage wrote. “Second, a well-capitalized nonprofit shouldn’t be an alternative choice to PBC product decisions… which can be aligned with the mission of the unique nonprofit… Third, while there may be plenty of potential for a well-capitalized nonprofit, to advance “charitable initiatives in sectors like…” “like healthcare, education and science,” which is a really narrow scope in comparison with the unique OpenAI mission. What about improving security and good policies?”
Brundage said he fears the nonprofit OpenAI will turn out to be a “sideshow,” giving the PBC license to operate as a “normal company” without addressing potentially problematic areas.
“What other guardrails will likely be put in place, apart from the board disclosures… to be sure that the existence of the nonprofit doesn’t allow the PBC to get off too easy?” he wrote. “(A)s OpenAI knows (partly from the work I co-authored there) that competition also results in compromise. What are the PBC and nonprofits going to do about it?”
