OpenAI scuttles for-profit transformation
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A nonprofit will remain in control of OpenAI and its technology, according to a letter to employees from Sam Altman on Monday.
The big picture: OpenAI began as a nonprofit, but Altman has been considering changing the structure since his brief ouster in November 2023 shook the company and the cost of building and maintaining ChatGPT skyrocketed.
State of play: OpenAI had already announced plans to transform its existing for-profit subsidiary into a Public Benefit Corporation (PBC), which is a for-profit corporation that can also prioritize non-financial goals.
Yes, but: Altman had also aimed to make that company independent of the current nonprofit board, in an effort to reassure investors spooked by the November 2023 boardroom fight.
- Today's announcement suggested that plan is dead.
- "The non-profit will control and also be a large shareholder of the PBC, giving the non-profit better resources to support many benefits," the announcement said.
What they're saying: "OpenAI is not a normal company and never will be," Altman said in the letter.
The intrigue: Elon Musk and others have sued OpenAI over its plans to spin out the for-profit subsidiary, charging the nonprofit with abandoning its mission.
- Musk, who co-founded OpenAI in 2017, now runs his own competitor, xAI.
- "We made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California," OpenAI board chairman Bret Taylor said in a statement.
Asked about Musk's suit on a call with reporters, Altman said, "You all are obsessed with Elon, that's your job — like, more power to you. But we are here to think about our mission and figure out how to enable that. And that mission has not changed."
Between the lines: Like Altman's original decision to create the for-profit subsidiary in 2019, today's move is all about trying to raise the enormous amounts of money Altman says will be needed for OpenAI to "put incredible tools in the hands of everyone."
- "We currently cannot supply nearly as much AI as the world wants," Altman said.
What's next: The tech business will be watching closely to see whether OpenAI's backers are happy enough with the new plans to keep the cash spigot open.
