OpenAI's corporate soul at risk

• If these changes go into effect, the nonprofit will still exist, and will still have that goal, OpenAI says. But it would no longer control the company, Axios and others have reported. Instead, OpenAI will, for the first time, have a fiduciary obligation to maximize the return to its shareholders, alongside its public purpose.

Between the lines: Some observers, including Robert Weissman, co-president of Public Citizen, have already concluded that "OpenAI is no longer serving its public, nonprofit purpose and is instead effectively controlled by the for-profit OpenAI affiliate."

• Were OpenAI to successfully make these governance changes, that outcome would no longer be in question — it would be reality.
• On the other hand, if OpenAI fails to make the governance changes within two years, the profit-seeking investors putting in $6.5 billion would have the right to take their money back, Axios reported this week. That would jeopardize the corporate mission in a much more direct manner.

Where it stands: "As far as we can tell, OpenAI no longer exists as a public interest organization." says Mozilla Foundation president Mark Surman, who leads one of the tech world's best-known nonprofits.

The big picture: OpenAI has been blurring the lines between nonprofit and for-profit for some years now as its cash needs continue to spiral upwards. (It's a lot easier to raise $6.5 billion in venture capital than in charitable donations.)

• Its latest transformation, into a public benefit corporation (PBC), would be its largest governance shift yet.
• PBCs are answerable to more than just shareholders, but they can give up their PBC status at any time with much less effort than it takes to stop being a nonprofit.
• "Under Delaware law, a PBC can revert to being a regular business corporation through a simple charter amendment," notes University of Texas law professor Jens Dammann. "And, even without such an amendment, PBCs may de facto abandon their social goals due to investor pressure."

How it works: OpenAI's current board is well-stocked with dyed-in-the-wool capitalists, including former Treasury Secretary Lawrence Summers as well as the current or former CEOs of Salesforce, Instacart, Quora and OpenAI itself.

• They can decide that the best way for OpenAI to reach its goal of benefiting humanity is to align itself entirely with deep-pocketed for-profit investors — while probably retaining for the nonprofit some financial stake in the company.
• They would almost certainly remain as the board of the for-profit company — and start getting paid for their service.

• As a trio of jurists explained in a paper earlier this year, such a move could in theory be challenged by the attorney general of Delaware, where OpenAI is domiciled. "But as in the regulation of Delaware for-profits," they write, "the state is remarkably hands-off in its regulation of nonprofits."

Zoom out: OpenAI was founded by a group of researchers who feared Silicon Valley would race to build super-powerful AI without making sure it was safe first. Critics of the company's evolution argue that, under Sam Altman, OpenAI flipped that script once it found that it could lead the race.

• OpenAI's faster pace might help explain a slew of departures from the company, including those of co-founder Ilya Sutskever, CTO Mira Murati and safety chief Jan Leike, reported The Information on Thursday.
• "If what's happening is that this reorganization allows AI to destroy the world, then that's simply inconsistent with the purposes of the original organization," Fordham law professor Linda Sugin tells Axios.

The bottom line: Getting rid of OpenAI's nonprofit control won't be easy, and will almost certainly attract litigation from figures such as Elon Musk, an OpenAI co-founder who put up some of the original money behind the nonprofit and who has already filed a different suit against the company.

• But with two years to achieve the switch, and with the possibility of obtaining a substantial stake in a $150 billion company for himself, there's a decent likelihood Altman will pull it off.