AI giant reconsiders decision, confirming that its non-profit arm will remain in charge of its operations.
OpenAI U-turn: Nonprofit to Keep Control of AI Business
In a surprising reversal, OpenAI announced on Monday that its nonprofit arm will maintain control over the business behind ChatGPT and other AI products.
Sam Altman, the CEO, explained in a letter to employees that the decision was made following consultations with civic leaders and discussions with the Attorneys General's offices in California and Delaware.
Altman, joined by Bret Taylor, OpenAI's nonprofit board chair, revealed that the board opted for the nonprofit to oversee the business. The for-profit arm will be converted into a Public Benefit Corporation (PBC), which balances shareholder interests with the mission, according to Taylor.
Initially, OpenAI was founded as a nonprofit research lab focused on safely developing artificial general intelligence (AGI) for the betterment of humanity. Now, nearly a decade later, the company boasts a market value of $300 billion and attracts 400 million weekly users of ChatGPT, its flagship product.
OpenAI had faced challenges in shifting its core governance structure, with a lawsuit filed by Tesla CEO Elon Musk, who accused the company and Altman of straying from the founding principles that compelled Musk's investment in the nonprofit.
The nonprofit's continued control meanwhile promises substantial resources for community programs and initiatives, making it a significant shareholder of the new PBC. By keeping the nonprofit at the helm, OpenAI seeks to emphasize societal benefits over financial gain in the development of AI.
The decision also simplifies OpenAI's capital structure, shifting away from a complex capped-profit model. Instead, it adopts a more standard approach similar to that of companies like Patagonia, adapting to the evolving AI landscape.
Furthermore, maintaining a nonprofit at the forefront likely ensures OpenAI's operations adhere to legal and regulatory expectations, aligning with its original purpose as prescribed by civic leaders and legal advisors.
In the revised structure, OpenAI's nonprofit arm will oversee a converted for-profit arm that operates as a Public Benefit Corporation (PBC), as per the announcement by Sam Altman and Bret Taylor. This move aligns with OpenAI's initial mission, which focuses on the development of artificial intelligence for societal benefits, tapping into the resources of the nonprofit for community programs and initiatives.
