OpenAI says its corporate structure needs to evolve to further its mission that artificial general intelligence (AGI) – AI that can complete most tasks that humans can – benefits all humanity.
OpenAI currently operates a for-profit organization managed by a nonprofit organization, with “profit caps” placed on investors and employees. But in a blog post published Friday, the company said it plans to begin converting its existing for-profit corporation into a Delaware public benefit corporation (PBC), making its common stock and OpenAI's mission a public benefit.
These details were reported elsewhere. In December, the New York Times revealed that OpenAI was in talks to pay billions of dollars to take control of the nonprofit. However, this is the first time OpenAI has revealed the proposal in a public memo.
“Toward 2025, we must become more than just a lab or a startup. We must become an enduring company,” OpenAI wrote in the post. are. “The world is building a new infrastructure of energy, land use, chips, data centers, data, AI models, and AI systems for the 21st century economy. We are taking the next step in our mission. We aim to evolve.”
OpenAI says the creation of PBC will allow it to “balance shareholder interests, stakeholder interests and public interest” in decision-making, while also “raising the necessary capital on conventional terms”. states. OpenAI also claims it will create one of the most well-resourced nonprofits in history. OpenAI's existing nonprofits will receive shares in PBC “at a fair valuation determined by an independent financial advisor.”
“Currently, we have nonprofit and for-profit organizations and will continue to have both,” OpenAI wrote. “Our current structure does not allow boards to directly consider the interests of those who fund their missions and does not allow nonprofits to easily do more than manage for-profits. PBC will run and manage OpenAI's operations and operations, while the nonprofit will hire a leadership team and staff to advance its philanthropic efforts in areas such as healthcare, education and science.
OpenAI was founded in 2015 as a nonprofit research organization. But as that experiment became increasingly capital-intensive, it accepted outside investment from venture capital firms and companies including Microsoft to build its current structure.
In October, OpenAI raised $6.6 billion at a valuation of $157 billion, bringing its total funding to $17.9 billion. But the company is still expected to lose money this year ($5 billion, according to CNBC), and the terms of its latest funding round call for it to complete a commercial transition within two years.
The plan faces hurdles.
Billionaire Elon Musk, one of OpenAI's co-founders, has filed an injunction to stop the company from becoming a for-profit company, accusing the company of abandoning its original philanthropic mission. Musk also claimed that OpenAI deprived investors of capital by extracting promises not to fund competition between Musk's AI company, xAI, and his company.
OpenAI said Musk's complaints were “baseless” and nothing more than sour grapes.
Meta, Facebook's parent company and AI rival, is also supporting efforts to prevent OpenAI from converting from a nonprofit to a for-profit organization. Mehta sent a letter to California Attorney General Rob Bonta in December arguing that allowing the transition would have a “seismic impact on Silicon Valley.”
“If OpenAI's new business model is effective, non-profit investors will be able to earn the same returns as investors who invest in for-profit companies through traditional means, while also benefiting from tax breaks provided by governments. ” Mehta wrote in the letter. .
OpenAI competitors such as xAI and Anthropic are structured as PBCs but lack a nonprofit component.
The structure of OpenAI as it currently exists ultimately led to the abrupt firing of CEO Sam Altman last November. It also authorizes the board of directors to determine exactly when OpenAI has achieved AGI and exempts this AGI from license agreements the company has with customers.
One such customer is Microsoft. Microsoft and OpenAI have clear internal definitions of AGI. According to The Information, the two companies signed a deal last year that states OpenAI will only achieve AGI if it develops an AI system that can generate at least $100 billion in profits.
OpenAI continues to grapple with an exodus of high-level talent, in part due to concerns that the company is prioritizing commercial products at the expense of safety. Carol Wainwright, one of the former employees who studied coordinating AI systems and safety policies, wrote in a post on X this fall that OpenAI was “organized as a nonprofit.” [but] acted like it was for profit” and “should not have acted” [be trusted] When you promise to do the right thing later. ”