OpenAI Reverses Course: Nonprofit to Retain Control Amid Restructuring

OpenAI scraps controversial plan to become for-profit after mounting pressure

On Monday, ChatGPT-maker OpenAI announced it will remain under the control of its founding nonprofit board, scrapping its controversial plan to split off its commercial operations as a for-profit company after mounting pressure from critics. In an official OpenAI blog post announcing the latest restructuring decision, CEO Sam Altman wrote: "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware." The move represents a significant shift in OpenAI's proposed restructuring. While the most recent previous version of the company's plan (which we covered in December) would have established OpenAI as a Public Benefit Corporation with the nonprofit merely holding shares and having limited influence, the revised approach keeps the nonprofit firmly in control of operations. Former employees and Elon Musk, a co-founder of OpenAI who later split with its leaders, had criticized the restructuring plan, saying it would remove important oversight of its technology. Musk filed a lawsuit seeking to block the plan, which is still ongoing. A judge recently agreed that Musk adequately pled that OpenAI breached an implied contract and then "unjustly retained the benefit" of his early investments in the company. While the ruling largely sustained Musk's core complaint, OpenAI did get some claims dropped, including a claim that Musk was misled by public OpenAI statements that the court found he helped write. A plan that met significant resistance OpenAI originally announced its intention to pivot last September, when Reuters reported that the company was planning to restructure its core business into a for-profit benefit corporation that would no longer be controlled by its nonprofit board. The proposed change, spearheaded by Altman, would have ostensibly made OpenAI more attractive to investors while creating a more conventional corporate structure. Under that plan, Altman would have received equity -- reportedly around 7 percent -- for the first time, representing a significant departure from his previous stance of not taking equity in line with OpenAI's humanitarian mission. The restructuring would have also allowed OpenAI to remove the cap on returns for investors, potentially making the firm more appealing to venture capitalists, with the nonprofit arm continuing to exist but only as a minority stakeholder rather than maintaining governance control. This plan emerged as the company sought a funding round that would value it at $150 billion, which later expanded to the $40 billion round at a $300 billion valuation. However, the new change in course follows months of mounting pressure from outside the company. In April, a group of legal scholars, AI researchers, and tech industry watchdogs openly opposed OpenAI's plans to restructure, sending a letter to the attorneys general of California and Delaware. Former OpenAI employees, Nobel laureates, and law professors also sent letters to state officials requesting that they halt the restructuring efforts out of safety concerns about which part of the company would be in control of hypothetical superintelligent future AI products. "OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit," he added. "That will not change." Uncertainty ahead While abandoning the restructuring that would have ended nonprofit control, OpenAI still plans to make significant changes to its corporate structure. "The for-profit LLC under the nonprofit will transition to a Public Benefit Corporation (PBC) with the same mission," Altman explained. "Instead of our current complex capped-profit structure -- which made sense when it looked like there might be one dominant AGI effort but doesn't in a world of many great AGI companies -- we are moving to a normal capital structure where everyone has stock. This is not a sale, but a change of structure to something simpler." But the plan may cause some uncertainty for OpenAI's financial future. When OpenAI secured a massive $40 billion funding round in March, it came with strings attached: Japanese conglomerate SoftBank, which committed $30 billion, stipulated that it would reduce its contribution to $20 billion if OpenAI failed to restructure into a fully for-profit entity by the end of 2025. Despite the challenges ahead, Altman expressed confidence in the path forward: "We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone."

What OpenAI's restructuring plan means for its corporate future | TechCrunch

OpenAI said on Monday it is pursuing a new restructuring plan after conversations with Delaware and California's attorneys general, both of whom were closely watching as OpenAI tried to break free of its odd corporate structure. Currently, OpenAI's nonprofit board governs the organization's for-profit operations. Under the new plan, OpenAI's for-profit arm will become a public benefit corporation (PBC), but will still be controlled by OpenAI's nonprofit. The new restructuring plan may be enough to appease regulators and OpenAI's investors, who've poured billions into the company in expectation of a return someday. But it could also throw a wrench into OpenAI's future plans, particularly if the company seeks to one day go public. Last December, OpenAI outlined a path that would've allowed it to spin its for-profit arm out from under the control of its nonprofit board, which is bound by certain obligations, including a clause in its charter to ensure that artificial general intelligence benefits all humanity. That plan went out the window on Monday. Now, OpenAI intends to have its nonprofit control and also be a large shareholder of the aforementioned PBC. Besides allowing OpenAI to operate more like a conventional company, a simpler structure could open the door to OpenAI raising additional capital by going public via an IPO. Given OpenAI's scale, the huge amount of cash it burns, and the public's massive interest, an IPO seems like something OpenAI might eventually explore. Stephen Diamond, a corporate governance professor at Santa Clara University, told TechCrunch there's a very narrow path to OpenAI becoming a public company under its newly proposed transition plan. While nonprofits can't go public, PBCs can. However, there is a question as to what OpenAI's PBC would own were OpenAI to IPO. "My sense is there's enormous intellectual property value at the OpenAI nonprofit level," said Diamond in an interview. "But if the PBC doesn't own and control the core IP, but are just licensed to use it, then what's the IPO? That's the challenge." Diamond noted that we don't know the exact details of OpenAI's plan, and that it's unclear if it'll even be successful in the end. In an email to TechCrunch, OpenAI spokesperson Steve Sharpe said OpenAI's nonprofit will continue to control the company's technology and that while OpenAI has no intention of going public at this time, an IPO would be "theoretically" possible under the proposed structure. If OpenAI's nonprofit really is in control of the organization's critical technology, shareholders wouldn't have much of a say in the company's decisions, said Rose Chan Loui, the founding executive director for UCLA's Law Program on Philanthropy and Nonprofits. Unlike buying stock in a typical company, shareholders in OpenAI would have to know that their influence over the corporation is limited. "I think an IPO is much harder in this scenario," said Loui in an interview with TechCrunch. OpenAI has been squeezed on all ends during its attempted restructuring. Just last week, a group of former OpenAI employees asked California and Delaware's AGs to block the startup's conversion, claiming it was at odds with OpenAI's charitable roots. Both AGs told TechCrunch that they're reviewing OpenAI's new plan. OpenAI's proposal also needs to appease the company's largest private investors, including Microsoft and Softbank, whose multi-billion-dollar investments reportedly hinge on OpenAI getting some sort of restructuring over the finish line. OpenAI's new plan gives the company a more conventional capital structure, meaning employees, investors, and the nonprofit will hold equity directly. Microsoft has not yet given its blessing to OpenAI over the new corporate structure, Bloomberg reported on Monday. The cloud provider wants to ensure the new structure adequately protects its multi-billion dollar investment in OpenAI. It's unclear if other key stakeholders have approved the deal. No one has put more pressure on OpenAI's restructuring than Elon Musk. The billionaire who co-founded OpenAI and now competes with it through his AI startup xAI submitted a $97 billion takeover bid to raise the price of OpenAI's nonprofit assets and gum up the ChatGPT maker's for-profit transition. Musk has also made OpenAI's restructuring a focal point in his lawsuit against the startup and Microsoft. At its core, Musk's lawsuit accuses OpenAI of abandoning its nonprofit mission to develop AGI and distribute it broadly. Last week, a federal judge denied several of OpenAI's motions to dismiss claims in Musk's suit. According to Diamond, this was a modest win for Musk, and may have played a role in OpenAI's changing course. However, in a briefing with members of the press on Monday, Altman reportedly denied the suit had any impact on OpenAI's plans. Marc Toberoff, Musk's lead counsel in his case against OpenAI, told TechCrunch the new corporate restructuring plan "changes nothing," implying that Musk won't be so quick to drop the case.

OpenAI Backs Down on Restructuring Amid Pushback

The startup behind ChatGPT is going to remain in nonprofit control, but it still needs regulatory approval. OpenAI on Monday announced a proposed restructuring that would give its nonprofit arm ongoing control of ChatGPT and the rest of the startup's AI products. The move is a reversal of an earlier announcement which called for the nonprofit to relinquish its authority to a newly created public-benefit corporation. The proposed company structure has to be approved by the attorney general offices in California and Delaware by early next year. Up to $30 billion in funding from SoftBank and other investors is contingent on this approval. That money is crucial for OpenAI to maintain its position as a leader in generative AI and give higher returns to investors. Previously, those returns were capped at 100 times the original investment. OpenAI was founded as a nonprofit research lab in 2015 to "benefit all of humanity." But the idealistic setup quickly became untenable due to the fundraising needs associated with building advanced AI systems. The push to undo this structure received significant backlash, including from Elon Musk, who cofounded the lab before an acrimonious split in 2018. In 2024, Musk sued OpenAI for breach of contract, arguing that it had abandoned its original mission in pursuit of profit. In March, a US federal judge denied Musk's preliminary bid to halt OpenAI's plans for the nonprofit to cede control. But last week, she allowed many of Musk's claims to move to trial. Former OpenAI staffer Todor Markov, who filed an amicus brief as part of Musk's lawsuit, said in a post that "it's unfortunate" that OpenAI revised its plan "after public pressure and the Attorneys General getting involved," but called the move "a win for the broader public." OpenAI's largest backer, Microsoft, has the authority to veto the restructuring plans, according to the Wall Street Journal. The tech giant has been busy building up its own AI division to compete with OpenAI, which could help diversify the risk associated with investing in a startup. OpenAI's blog said it looks forward "to advancing the details" of the new plan with the attorneys general and Microsoft. Microsoft declined to comment. OpenAI and SoftBank did not immediately respond to a request for comment. In 2024, OpenAI published a blog about the need to evolve its corporate structure. The announcement came about a year after Altman was abruptly fired by the company's nonprofit board (he was reinstated after employees revolted). After the blog post came out, numerous advocacy groups wrote to the attorneys general in opposition, arguing that the plans could allegedly turn charitable funds into corporate cash. Now, those efforts appear to have paid off. "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 chair Bret Taylor wrote in a blog post from the company.

OpenAI Backpedals on For-Profit Push

Facing lawsuits and regulatory scrutiny, OpenAI is backing off plans for a for-profit structure. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," OpenAI CEO Sam Altman said in a letter to employees. OpenAI was founded as a nonprofit in 2015, and in 2019, it restructured by establishing a "capped-profit" arm, which can (somewhat) limit the returns on profits for employees and investors, such as Microsoft. In return, OpenAI could attract more investment and pay leading data scientists bigger salaries. The nonprofit side to OpenAI has continued to govern the company. But in December, the San Francisco lab announced its transition to an "enduring company" by becoming a Public Benefit Corporation that would run OpenAI's operations and businesses. Meanwhile, the nonprofit side would merely "hire a leadership team and staff to pursue charitable initiatives in sectors such as health care, education, and science." OpenAI justified the change by explaining it would help it raise even more capital from investors to fund AI research, including the development of artificial general intelligence (AGI), or AI that equals or surpasses human intelligence. But the move also faced criticism and a lawsuit from OpenAI co-founder Elon Musk, who alleged the company was abandoning its mission to ensure that AI development benefits all, rather than merely corporations. Last month, former employees for OpenAI and several top AI scientists also signed an open letter urging the attorneys general for California and Delaware to intervene and stop the company from becoming a for-profit structure. "AGI is the most important and potentially dangerous technology of our time," said George Hinton, a scientist dubbed the "AI godfather," who signed the letter. "OpenAI was right that this technology merits strong structures and incentives to ensure it is developed safely, and is wrong now in attempting to change these structures and incentives." So it looks like the resistance forced OpenAI to relent. Nevertheless, the company says it's still transitioning its capped-profit commercial arm into a Public Benefit Corporation, which is obligated to weigh both the business and societal benefit of its decisions. "The nonprofit will control and also be a large shareholder of the PBC, giving the nonprofit better resources to support many benefits," Altman said today. "Instead of our current complex capped-profit structure -- which made sense when it looked like there might be one dominant AGI effort but doesn't in a world of many great AGI companies -- we are moving to a normal capital structure where everyone has stock," he added. "This is not a sale, but a change of structure to something simpler." The company plans on sharing more details about its new structuring plans with the attorneys general, Microsoft, and its newly announced nonprofit commissioners. Disclosure: Ziff Davis, PCMag's parent company, filed a lawsuit against OpenAI in April 2025, alleging it infringed Ziff Davis copyrights in training and operating its AI systems.

OpenAI caves to pressure, keeps nonprofit in charge

Funny what a public scolding from AI luminaries and a word from state AGs can do OpenAI's contentious plan to overhaul its corporate structure in favor of a conventional for-profit model has been reworked, with the AI giant bowing to pressure to keep its nonprofit in control, even as it presses ahead with parts of the restructuring. OpenAI published a letter from CEO Sam Altman on Monday informing employees, stakeholders, and the public that while its for-profit subsidiary will transition into a Public Benefit Corporation (PBC), its nonprofit parent will remain in control. "OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit," OpenAI chairman Bret Taylor said in an introduction to Altman's letter. "Going forward, it will continue to be overseen and controlled by that nonprofit." Both Taylor and Altman attributed the decision to retain nonprofit control, amid a broader restructuring effort announced in December, to conversations with civic leaders and the Attorneys General of California and Delaware. The update comes weeks after a coalition of former OpenAI employees and AI researchers, including Geoffrey Hinton, wrote an open letter urging the AGs in those states to investigate whether the biz's restructuring aligned with its nonprofit obligations. We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General," Altman said. "We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners." Prior to today, OpenAI's plan was to shift operational control toward the PBC, with the nonprofit continuing in a more limited oversight role. Signatories to the open letter expressed concern that such a change could undermine governance safeguards -- like maintaining an independent board free from profit incentives and upholding capped investor returns. OpenAI's new plan may still not please everyone, as those capped investor returns are still being scrapped. "Instead of our current complex capped-profit structure ... we are moving to a normal capital structure where everyone has stock," Altman said. "This is not a sale, but a change of structure to something simpler." Altman said that the capped-profit model made sense when it appeared that OpenAI might be the only viable firm attempting to reach artificial general intelligence, but it would only hamstring the firm "in a world of many great AGI companies." In order to ensure the nonprofit side of the biz remains in control, it's going to become a large shareholder in the PBC through an unspecified amount of shares "supported by independent financial advisors," Altman said. "As the PBC grows, the nonprofit's resources will grow, so it can do even more," the OpenAI CEO added. There will still be a profit incentive at the heart of the new OpenAI, in other words - just one that will ostensibly be curbed by the shareholder leadership of the nonprofit side of the company. It's unknown how the signatories to the open letter will regard the announced changes. We've reached out to the coalition that signed the letter for comment, but didn't immediately hear back. The decision may also affect estranged OpenAI cofounder Elon Musk's ongoing lawsuit, which alleges OpenAI's move toward a for-profit structure violated its original nonprofit commitments. We've reached out to both Musk and his legal team on the case for comment on the matter, but haven't heard back. ®

OpenAI reverses course and says its nonprofit will continue to control its business

OpenAI is reversing course and said Monday its nonprofit will continue to control the business that makes ChatGPT and other artificial intelligence products. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," said CEO Sam Altman in a letter to employees. Altman and the chair of OpenAI's nonprofit board, Bret Taylor, said the board made the decision for the nonprofit to retain control of OpenAI. The nonprofit already has a for-profit arm, but that arm will be converted into a public benefit corporation "that has to consider the interests of both shareholders and the mission," Taylor said. OpenAI's co-founders, including Altman and Tesla CEO Musk, originally started it as a nonprofit research laboratory on a mission to safely build what's known as artificial general intelligence, or AGI, for humanity's benefit. Nearly a decade later, OpenAI has reported its market value as $300 billion and counts 400 million weekly users of ChatGPT, its flagship product. OpenAI faced a number of challenges in converting its core governance structure. One is a lawsuit from Musk, who accuses the company and Altman of betraying the founding principles that led Musk to invest in the charity.

OpenAI says nonprofit will retain control of company, bowing to outside pressure

Sam Altman, CEO of OpenAI, is seen through glass, during an event on the sidelines of the Artificial Intelligence Action Summit in Paris, France, on Feb. 11, 2025. OpenAI on Monday bowed to pressure from civic leaders and ex-employees, announcing its nonprofit would retain control of the company even as it restructures into a public benefit corporation. In a zoom call with reporters on Monday, OpenAI board chairman Bret Taylor said they had had discussions with the attorneys general of California and Delaware before deciding on the change. "The TLDR is that with the structure we're contemplating, the not-for-profit will remain in control of OpenAI," Taylor said. "We will be converting the limited liability company, that is a subsidiary of that nonprofit, to a public benefit corporation. By doing so, it will change the equity structure of that company so that employees, investors and the not-for-profit can own equity in that PBC." Taylor said they had commissioned outside financial advisors to advise OpenAI on the recapitalization and declined to share how much of a stake the nonprofit would have in the company. OpenAI CEO Sam Altman said on the call that he was "very happy that the nonprofit and the PBC will have the same mission," Altman said, mentioning that the board and stakeholders agreed with the decision." When asked whether the changes would affect Elon Musk's ongoing legal battle against the company, Altman said, "We are obsessed with our mission and what it takes to fulfill that. 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."

OpenAI Backtracks on Plans to Drop Nonprofit Control

Sign up for the On Tech newsletter. Get our best tech reporting from the week. Get it sent to your inbox. OpenAI said on Monday that it was restructuring as a public benefit corporation, allowing the nonprofit that controls OpenAI to retain its grip on the company. The nonprofit will be OpenAI's largest shareholder. Sam Altman, OpenAI chief executive, created the artificial intelligence organization with several other Silicon Valley figures, including Elon Musk, as a nonprofit in late 2015. In 2018, after Mr. Musk left in a power struggle, Mr. Altman attached OpenAI to a for-profit company so he could raise the billions of dollars needed to build A.I. technologies. But the nonprofit retained its grip in what become an unorthodox structure that some saw as an albatross to the company's growth. Last year, Mr. Altman and his company began working on a plan to shift control from the nonprofit to OpenAI's investors, so that it would be more attractive to investors. The company, however, backtracked from that plan and the nonprofit will now maintain control. The decision is a victory for OpenAI's critics, including Mr. Musk, who said the company was too focused on profits and had abandoned its early plan to build A.I. systems with safety foremost in mind. A public benefit corporation is often described as an organization designed to create public and social good and allows outsiders to invest in much the same way they invest in other companies. "I am very happy we made the decision for the nonprofit to maintain control," Mr. Altman said during an press briefing. He added that the new change "sets us up to have a more understandable structure to do the things that a company like our has to do." OpenAI said that it is still negotiating the nonprofit's stake in the new corporation and that the nonprofit would pick the board members of the new corporation. The Japanese conglomerate SoftBank recently led a $40 billion funding round in OpenAI that values the company at $300 billion. If this shift is not completed by the end of the year, SoftBank will have the option to reduce its total contribution to $20 billion, said a person familiar with the latest investment deal. This is a developing story. Check back for updates.

OpenAI says non-profit will remain in control after backlash

OpenAI, the parent of artificial intelligence service ChatGPT, has announced a new governance plan after a bitter power struggle over the business. Boss Sam Altman said OpenAI would remain under the control of its for-profit board, while becoming what is known in the US as a public benefit corporation. Mr Altman had put forward a similar plan in December - but without clarifying the control of the non-profit. The update follows widespread scrutiny of the startup, which began as a non-profit and faced criticism, including from co-founder Elon Musk, that its quest for growth is pushing it to stray from its original mission of creating technology for the benefit of humanity.

OpenAI abandons for-profit shift, keeps nonprofit control with new public benefit corporation

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? OpenAI and Sam Altman have decided that becoming a for-profit entity is more trouble than it's worth. The CEO has announced that the nonprofit arm will continue to control the company as it becomes a public benefit corporation. OpenAI made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware, writes Altman. "With the structure we're contemplating, the not-for-profit will remain in control of OpenAI," Bret Taylor, OpenAI's board chairman, told reporters. "We will be converting the limited liability company, that is a subsidiary of that nonprofit, to a public benefit corporation. By doing so, it will change the equity structure of that company so that employees, investors and the not-for-profit can own equity in that PBC." Taylor added that the non-profit would have a majority stake in the company. OpenAI's plans to spin out its for-profit subsidiary had led to a lawsuit from Elon Musk, who sued the company over claims it was abandoning its mission to benefit humanity. Altman denied that the decision was in any way related to Musk's actions. OpenAI was founded as a nonprofit in 2015. It created OpenAI LP, a capped-profit limited-partnership subsidiary, in 2019. The subsidiary limits the returns on profits to outside investors and partners, such as Microsoft. A public benefit corporation, which the for-profit portion of the company will transition to, is still a profit-focused entity but one that legally commits to pursuing a specific public benefit or set of social/environmental purposes in addition to generating profits for shareholders. In a letter to employees, Altman wrote that OpenAI's mission is to ensure that artificial general intelligence (AGI) - artificial intelligence with human-like intelligence - benefits all of humanity. Altman recently said that almost one billion people around the world were now using ChatGPT for a variety of reasons. The changing corporate structure is because the company "currently cannot supply nearly as much AI as the world wants and we have to put usage limits on our systems and run them slowly." Altman adds that making OpenAI's services available to all of humanity currently requires hundreds of billions of dollars and may eventually require trillions of dollars. Last month, a number of former OpenAI employees, prominent AI scientists, law experts, and others signed an open letter urging the attorneys general for California and Delaware to stop OpenAI from becoming a for-profit entity. It was recently reported that Microsoft boss Satya Nadella's once-close relationship with Altman was becoming frosty, and Microsoft could block OpenAI's for-profit restructuring.

OpenAI scraps plan to transition into a for-profit company

The ChatGPT maker had sought to separate from its nonprofit board but reversed course after pressure from former employees and a lawsuit from Elon Musk. SAN FRANCISCO -- ChatGPT maker OpenAI will remain under the control of its founding nonprofit board, after abandoning its plan to split off its commercial operations as for-profit company. Former employees and Elon Musk, a co-founder of OpenAI who later split with its leaders, had criticized the restructuring plan, saying it would remove important oversight of its artificial intelligence technology. Musk filed a lawsuit seeking to block the plan; the suit is still ongoing. Changing its plan could create uncertainty for OpenAI's financial future. The company had said it needed to transition into a for-profit company to unlock billions of dollars of new funding from Japanese conglomerate SoftBank. OpenAI announced it was scrapping its plan to restructure in an email sent to reporters Monday. "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," board chair Bret Taylor said in the announcement. OpenAI was incorporated in Delaware but has its headquarters in California. This is a developing story and will be updated.

'We want to build a brain for the world' - Sam Altman makes a crucial decision about the future of OpenAI, and it may determine the future of ChatGPT and AGI

The question of OpenAI, its business, and intentions for the future of AI may finally be solved. In an open letter, OpenAI CEO and co-founder Sam Altman outlined plans to keep OpenAI running under the oversight of a non-profit. What's more, the profit side of the business is transitioning to a Public Benefit Corporation (PBC). A PCB is notable because it means that while that portion of OpenAI will still be interested in making a profit, it will have a larger purpose, one that's intended to serve the good of society. In more practical terms, Altman wrote, "We want to put incredible tools in the hands of everyone....We want to open source very capable models. We want to give our users a great deal of freedom in how we let them use our tools within broad boundaries, even if we don't always share the same moral framework, and to let our users make decisions about the behavior of ChatGPT." In recent years, former partner and OpenAI co-founder Elon Musk has sued OpenAI for leaving its non-profit roots behind, and others have voiced concern about OpenAI not open-sourcing key models. Altman previously admitted that he was on the wrong side of that argument, and Musk eventually lost his case. Now, though, OpenAI and Altman seem to be moving in the direction Musk and the open-source critics want. The change of heart comes as Altman admits that in the early days, "we did not have a detailed sense for how we were going to accomplish our mission" and also admitted that some at OpenAI back then thought AI "should only be in the hands of a few trusted people who could 'handle it'." The perspective now, though, especially as Artificial General Intelligence (AGI) is on the horizon, is "We want to build a brain for the world and make it super easy for people to use for whatever they want," wrote Altman. The go-forward plan is for OpenAI's non-profit to be "the largest and most effective nonprofit in history that will be focused on using AI to enable the highest-leverage outcomes for people." Altman also wants to develop "beneficial AGI" and notes the importance of safety and alignment. "As AI accelerates, our commitment to safety grows stronger. We want to make sure democratic AI wins over authoritarian AI." Altman's come quite a long way since he was suddenly ousted in late 2023 by, among others, Ilya Sutskever, formerly OpenAI's Chief Scientist and co-founder. He returned just days later. There's a sense in the new letter that AI and the coming AGI are bigger than one person, one company, and one AI like ChatGPT. As for what this will mean for the future of OpenAI, ChatGPT, and AGI, it is unclear. The PCB may be focused on the public good, but it will still be interested in making a profit. How the non-profit overseer impacts that is unclear. OpenAI says it will be talking to attorneys generals in California and Delaware, who helped it come to this decision, along with its biggest commercial partner, Microsoft (Copilot's base models are GPT-based), about the implementation of its new plan. "We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone," wrote Altman.

OpenAI reverses course and says non-profit arm will retain control of firm

CEO, Sam Altman, says decision to backtrack was made 'after hearing from civic leaders' and state attorneys general OpenAI has reversed course in the process of transforming into a for-profit entity, announcing on Monday that its non-profit arm would continue to control the business that makes ChatGPT and other artificial intelligence products. Previously, the company had sought more independence for its for-profit division. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," said CEO Sam Altman in a letter to employees. Altman and the chair of OpenAI's non-profit board, Bret Taylor, said the board made the choice for the non-profit to retain control of OpenAI. A press release from the company said that the for-profit portion of the company, through which Altman has been able to raise billions to fund OpenAI's work, would transition to a public benefit corporation, a mission-driven designation for a corporate structure that is still aimed at profit but also "has to consider the interests of both shareholders and the mission". The non-profit would retain control over the public benefit corporation as a large shareholder, according to the press release. OpenAI's co-founders, including Altman and Tesla CEO, Elon Musk, originally started it as a non-profit research laboratory on a mission to safely build what's known as artificial general intelligence, or AGI, for humanity's benefit. Nearly a decade later, OpenAI has reported its market value as $300bn and counts 400 million weekly users of ChatGPT, its flagship product, according to a report the venture capital firm Andreessen Horowitz, which has invested in the startup. OpenAI faced a number of challenges in converting its core governance structure. One major roadblock was a lawsuit from Musk, who accuses the company and Altman of betraying the founding principles that led Musk to invest in the charity. Musk fell out with Altman and started his own competing AI company, xAI, which recently purchased X, formerly known as Twitter. OpenAI has cast Musk as a sore loser in the dispute, embittered by a rival's success.

Sam Altman: OpenAI nonprofit will retain control of the $300 billion company

OpenAI CEO Sam Altman made the unicorn of unicorns. In just 10 years, he created a company valued at $300 billion, and in the process, delivered a new technology with potentially world-changing implications. And he's had to do it all under the control of the OpenAI nonprofit. It's a Silicon Valley dream come true, but also a capitalist's nightmare scenario. After previous moves to turn OpenAI into a for-profit enterprise, Altman revealed today an "updated plan for evolving [the company's] structure." In an open letter to OpenAI employees, the CEO confirmed that the OpenAI nonprofit will retain control over the for-profit LLC after all, a big victory for OpenAI's critics. In recent years, the nonprofit status of OpenAI has become one of the biggest controversies in Silicon Valley, thanks in large part to Elon Musk's lawsuit against the company. Last year, Musk sued the ChatGPT maker for breach of contract based on its transition to a for-profit enterprise. Musk was one of the original backers of OpenAI, but after he left the company in 2018, Altman formed a "capped" for-profit LLC. Musk has been very critical of this decision, as have the attorneys general of both California and Delaware and a legion of AI skeptics. As a result, OpenAI has maintained a strange corporate structure, with its nonprofit arm controlling its for-profit LLC. The LLC will now transition into a Public Benefit Corporation, or "a purpose-driven company structure that has to consider the interests of both shareholders and the mission," according to OpenAI. Under this arrangement, OpenAI will be legally obligated to consider more than profit motives as it delivers AI products. "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," wrote OpenAI board member Bret Taylor in a blog post. "We thank both offices and we look forward to continuing these important conversations to make sure OpenAI can continue to effectively pursue its mission of ensuring AGI benefits all of humanity. Sam wrote the letter below to our employees and stakeholders about why we are so excited for this new direction." In his open letter to OpenAI employees, Altman said he hopes to accomplish three things with the company's evolution: First, to allow the company to attract new investments, to create the "largest and most effective nonprofit in history," and "to deliver beneficial AGI." AGI, or artificial general intelligence, is a loosely defined concept with shifting goalposts, but according to OpenAI, it means "AI systems that are generally smarter than humans." And to pull off this feat, Altman says OpenAI may require trillions of dollars in additional resources. "We want to be able to operate and get resources in such a way that we can make our services broadly available to all of humanity, which currently requires hundreds of billions of dollars and may eventually require trillions of dollars. We believe this is the best way for us to fulfill our mission and to get people to create massive benefits for each other with these new tools," Altman wrote.

OpenAI's for-profit switcheroo leaves Sam Altman hanging

Why it matters: Since Altman was briefly ousted as CEO by the nonprofit board in November 2023, his efforts to raise billions for OpenAI's mission of creating advanced AI "that benefits all of humanity" have been shadowed by questions about the firm's governance. Driving the news: Under the revamped plan announced Monday, OpenAI's for-profit arm will, as long planned, shift from a "capped-profit" partnership to a public benefit corporation. This plan would let OpenAI hang on to tens of billions of dollars in recent funding that were contingent on a restructuring -- assuming OpenAI meets its upcoming deadlines for the changes. Yes, but: The other big part of Altman's original plan was to make this for-profit company independent of its current nonprofit board -- the entity that fired him a year and a half ago (though its membership has since almost entirely changed). That means that, in theory, what happened in November 2023 could happen again. A future OpenAI nonprofit board could decide that OpenAI-the-company wasn't staying true to its mission, and fire its leadership. The big picture: At stake in this corporate-law conflict is control over what Silicon Valley sees as its next big platform -- both who will reap the profits and who will shape AI socially and ethically. What's next: A lot of people still need to sign off on the new deal -- most centrally, Microsoft. Regulators have also indicated they want to take a look at OpenAI's revised plan, with the attorney generals from California and Delaware among those that could weigh in. The new plan doesn't appear to have put to rest OpenAI's long-running legal battle with its co-founder Elon Musk -- who has sought to block the company's restructuring, claiming it's a betrayal of the original mission. Other critics are also saying they aren't satisfied with the latest approach.

Elon Musk to OpenAI: The lawsuit is still on

"Nothing in today's announcement changes the fact that OpenAI will still be developing closed-source AI for the benefit of Altman, his investors, and Microsoft," said Musk's lawyer Marc Toberoff in a statement to Reuters on Monday. Toberoff said OpenAI's decision to remain governed by a nonprofit entity "obscures critical details about the supposed 'non-profit control' arrangement." OpenAI plans to transition its for-profit LLC to a Public Benefit Corporation (PBC) that will be governed by the overarching nonprofit and will make the nonprofit a shareholder of the PBC. Toberoff described the new arrangement as a "sharply reduced ownership stake the non-profit will receive in Altman's for-profit enterprise." The ChatGPT maker's decision last year to restructure as a for-profit company prompted Musk, who was an early funder in OpenAI's nascent days, to sue the company for breach of contract. He alleged the company deceived him by promising the company's mission was entirely altruistic. More recently, Musk unsuccessfully offered to buy OpenAI for $97.4 billion, which OpenAI rejected, calling it a "sham bid," and accusing Musk of trying to take down a competitor. Musk owns xAI, which makes the Grok AI chatbot. OpenAI's decision to remain a capped for-profit was a major reversal for the company, which is currently valued at $300 billion. In a blog post explaining the announcement, OpenAI's board chairman Bret Taylor said the decision was made "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." Last month, former OpenAI staffers and leaders of the AI community sent an open letter to California and Delaware attorneys general urging them to stop OpenAI's restructuring, citing societal safety concerns. OpenAI may have alleviated the signatories' concerns, but Musk's lawsuit is still going forward. "The founding mission remains betrayed," Toberoff told Bloomberg.

OpenAI Ends Profit Cap in Restructure, Microsoft Yet to Sign Off - Decrypt

Microsoft, OpenAI's largest investor, has not yet approved the restructuring and is still negotiating terms. OpenAI is removing limits on how much money investors can make while keeping its nonprofit in charge, converting its current business arm into a "public benefit company," a type of for-profit business that needs to consider both making money and serving the public good. "We want to be able to operate and get resources in such a way that we can make our services broadly available to all of humanity," CEO Sam Altman stated in a letter published Monday. The move places it at temporary odds with major shareholder Microsoft, whose $13.75 billion backing of the ChatGPT maker has helped bolster its market dominance in an increasingly crowded sector. Microsoft is now reportedly holding out until it understands the finer points of the conversion, according to a report by Bloomberg on Monday. Such a change "currently requires hundreds of billions of dollars," Altman conceded in his letter, adding it "may eventually require trillions of dollars." The OpenAI founder acknowledged the pressure from a coalition of OpenAI alumni primarily based in California who wrote earlier in January detailing "deep concerns" over the company's conversion plans. The coalition requested Attorney General Rob Bonta to ensure that OpenAI's assets "are not illegally diverted for private gain." The restructuring also seeks input from both California and Delaware attorneys general, who oversee the fair market valuation of the nonprofit's stake in the new entity. To this end, Altman claimed OpenAI would advance "in continued conversation" with the civic leaders, Microsoft, and its newly appointed nonprofit commissioners. Yet for Altman, the change would likely limit his powers in the company. By retaining nonprofit board control, Altman would be required to answer to an independent board, preventing unilateral or purely commercial decision-making. "We want our nonprofit to be the largest and most effective nonprofit in history that will be focused on using AI to enable the highest-leverage outcomes for people," Altman wrote.

OpenAI abandons plan to become for-profit company

San Francisco (AFP) - OpenAI CEO Sam Altman announced Monday that the company behind ChatGPT will continue to be run as a nonprofit, abandoning a contested plan to convert into a for-profit organization. The structural issue had become a significant point of contention for the artificial intelligence (AI) pioneer, with major investors pushing for the change to better secure their returns. AI safety advocates had expressed concerns about pursuing substantial profits from such powerful technology without the oversight of a nonprofit board of directors acting in society's interest rather than for shareholder profits. "OpenAI is not a normal company and never will be," Altman wrote in an email to staff posted on the company's website. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," he added. OpenAI was founded as a nonprofit in 2015 and later created a "capped" for-profit entity allowing limited profit-making to attract investors, with cloud computing giant Microsoft becoming the largest early backer. This arrangement nearly collapsed in 2023 when the board unexpectedly fired Altman. Staff revolted, leading to Altman's reinstatement while those responsible for his dismissal departed. Alarmed by the instability, investors demanded OpenAI transition to a more traditional for-profit structure within two years. Under its initial reform plan revealed last year, OpenAI would have become an outright for-profit public benefit corporation (PBC), reassuring investors considering the tens of billions of dollars necessary to fulfill the company's ambitions. Any status change, however, requires approval from state governments in California and Delaware, where the company is headquartered and registered, respectively. The plan faced strong criticism from AI safety activists and co-founder Elon Musk, who sued the company he left in 2018, claiming the proposal violated its founding philosophy. In the revised plan, OpenAI's money-making arm will now be fully open to generate profits but, crucially, will remain under the nonprofit board's supervision. "We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone," Altman said. SoftBank sign-off OpenAI's major investors will likely have a say in this proposal, with Japanese investment giant SoftBank having made the change to being a for-profit a condition for their massive $30 billion investment announced on March 31. In an official document, SoftBank stated its total investment could be reduced to $20 billion if OpenAI does not restructure into a for-profit entity by year-end. The substantial cash injections are needed to cover OpenAI's colossal computing requirements to build increasingly energy-intensive and complex AI models. The company's original vision did not contemplate "the needs for hundreds of billions of dollars of compute to train models and serve users," Altman said. SoftBank's contribution in March represented the majority of the $40 billion raised in a funding round that valued the ChatGPT maker at $300 billion, marking the largest capital-raising event ever for a startup. The company, led by Altman, has become one of Silicon Valley's most successful startups, propelled to prominence in 2022 with the release of ChatGPT, its generative AI chatbot.

OpenAI announces plan to remain a nonprofit company

OpenAI, the pioneering artificial intelligence company behind ChatGPT, announced on Monday a proposal to continue operating as a nonprofit, leaving its money-making arm under the supervision of a nonprofit board to help ensure its technology evolves safely. OpenAI CEO Sam Altman announced Monday that the company behind ChatGPT will continue to be run as a nonprofit, abandoning a contested plan to convert into a for-profit organization. The structural issue had become a significant point of contention for the artificial intelligence (AI) pioneer, with major investors pushing for the change to better secure their returns. AI safety advocates had expressed concerns about pursuing substantial profits from such powerful technology without the oversight of a nonprofit board of directors acting in society's interest rather than for shareholder profits. "OpenAI is not a normal company and never will be," Altman wrote in an email to staff posted on the company's website. Read moreTech experts debate threats, promise of AI ahead of global summit in Paris "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," he added. OpenAI was founded as a nonprofit in 2015 and later created a "capped" for-profit entity allowing limited profit-making to attract investors, with cloud computing giant Microsoft becoming the largest early backer. This arrangement nearly collapsed in 2023 when the board unexpectedly fired Altman. Staff revolted, leading to Altman's reinstatement while those responsible for his dismissal departed. Alarmed by the instability, investors demanded OpenAI transition to a more traditional for-profit structure within two years. Under its initial reform plan revealed last year, OpenAI would have become an outright for-profit public benefit corporation (PBC), reassuring investors considering the tens of billions of dollars necessary to fulfill the company's ambitions. Any status change, however, requires approval from state governments in California and Delaware, where the company is headquartered and registered, respectively. The plan faced strong criticism from AI safety activists and co-founder Elon Musk, who sued the company he left in 2018, claiming the proposal violated its founding philosophy. In the revised plan, OpenAI's money-making arm will now be fully open to generate profits but, crucially, will remain under the nonprofit board's supervision. "We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone," Altman said. SoftBank sign-off OpenAI's major investors will likely have a say in this proposal, with Japanese investment giant SoftBank having made the change to being a for-profit a condition for their massive $30 billion investment announced on March 31. In an official document, SoftBank stated its total investment could be reduced to $20 billion if OpenAI does not restructure into a for-profit entity by year-end. The substantial cash injections are needed to cover OpenAI's colossal computing requirements to build increasingly energy-intensive and complex AI models. The company's original vision did not contemplate "the needs for hundreds of billions of dollars of compute to train models and serve users," Altman said. SoftBank's contribution in March represented the majority of the $40 billion raised in a funding round that valued the ChatGPT maker at $300 billion, marking the largest capital-raising event ever for a startup. The company, led by Altman, has become one of Silicon Valley's most successful startups, propelled to prominence in 2022 with the release of ChatGPT, its generative AI chatbot.

OpenAI Restructures For-Profit Arm into Public Benefit Corporation, Maintains Nonprofit Control | AIM

OpenAI has announced a major structural shift by converting its for-profit arm into a public benefit corporation (PBC) while reaffirming that its nonprofit entity will continue to oversee and control the organisation. Founded as a nonprofit, OpenAI has operated with a unique governance model since its inception. In 2019, it introduced a for-profit limited liability company (LLC) under nonprofit control to attract investment while capping profits. The LLC will now become a PBC, a move the company says aligns better with its mission and the evolving AI landscape. In December, OpenAI announced plans to convert its for-profit arm into a PBC -- a structure that allows companies to pursue both shareholder returns and social objectives, in contrast to nonprofits, which focus exclusively on the public good. At that time, the company stated that the PBC would run and control OpenAI's operations and business, while the nonprofit would hire a leadership team and staff to pursue charitable initiatives in sectors such as healthcare, education, and science. However, this plan has now been reversed, and the nonprofit will now maintain control over the organisation. "The for-profit LLC under the nonprofit will transition to a public benefit corporation with the same mission," said CEO Sam Altman in a letter to employees and stakeholders. "The nonprofit will continue to control the PBC, and will become a big shareholder in the PBC, in an amount supported by independent financial advisors." According to OpenAI, this change will help secure the large-scale funding needed to build and operate increasingly powerful AI systems. The company noted that it currently cannot meet demand for its services due to resource constraints, stating that delivering AI broadly "requires hundreds of billions of dollars and may eventually require trillions". OpenAI's nonprofit will use the financial benefits from its PBC ownership to expand programmes aimed at democratising AI and supporting its use in areas such as health, education, and public services. The restructuring follows discussions with civic leaders and the attorneys general of California and Delaware. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the attorneys general," Altman wrote. Altman emphasised that OpenAI's core mission remains unchanged. "Our mission is to ensure that artificial general intelligence (AGI) benefits all of humanity." The organisation also indicated that it intends to support open-source efforts and give users broad freedom in how they use its tools. "We want to open source very capable models," Altman wrote, noting a focus on user autonomy within boundaries that preserve safety and respect for others' freedom. This shift also simplifies OpenAI's capital structure, ending its complex capped-profit model. "This is not a sale, but a change of structure to something simpler," Altman stated. As the AI industry continues to expand with multiple players pursuing AGI, OpenAI's move aligns it with peers like Anthropic and xAI , which already operate as PBCs. The company has formed a nonprofit commission to advise on how best to use its new resources to serve the public good. Recommendations are expected to focus on enabling equitable AI outcomes. "We believe this sets us up to continue to make rapid, safe progress and to put great AI in the hands of everyone," Altman concluded.

OpenAI backs down from restructuring plans

As per the new plan, its non-profit will continue to control the business. OpenAI has announced that its non-profit arm will retain control of the $300bn start-up. The move backs away from the start-up's previous plans, which would have given a newly created public-benefit corporation (PBC) power over the non-profit. In a blog post yesterday (5 May), Bret Taylor, chairperson of the company's board, said that the decision emerged after "constructive dialogue" with US attorney generals' offices in Delaware and California. "With the structure we're contemplating, the not-for-profit will remain in control of OpenAI," Taylor told reporters. "We will be converting the limited liability company, that is a subsidiary of that non-profit, to a public benefit corporation." Last September, the AI start-up announced plans to restructure its business into a for-profit corporation, and earlier this year, it raised $40bn. Although, $10bn in funding from SoftBank, its biggest investor, hinges on OpenAI's ability to complete its for-profit restructuring. According to the new plan, OpenAI's for-profit business, which has been under its non-profit arm since 2019, will transition into a PBC. The non-profit will become a large shareholder in the new PBC. "PBCs have become the standard for-profit structure for other AGI [artificial general intelligence] labs like Anthropic and xAI," explained CEO Sam Altman, a structure which also allows the company to focus both on shareholder interests as well as its own "values". OpenAI will be in continued talks with the attorney generals' offices, as well as Microsoft and the start-up's newly appointed non-profit commissioners to advance the details of its new restructuring plan. However, Microsoft, one of OpenAI's biggest backers, has the authority to veto those plans. Elon Musk, one of OpenAI's co-founders and a direct competitor to the AI company, filed suit last year alleging that OpenAI did not stick to its original objective of developing AI for the benefit of humanity. He later named Microsoft as a defendant in the case. Earlier this March, a federal judge denied his motion to stop OpenAI's for-profit restructuring, although many of Musk's claims were allowed to move to trial according to a filing last week. In February, Musk even made an unsolicited bid to purchase the non-profit that controls OpenAI for almost $100bn, although days later, a lawyer for Musk said that he will withdraw the offer if OpenAI's board of directors agree to stop the planned conversion to a for-profit company. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.

OpenAI abandons plan to spin off for-profit arm - SiliconANGLE

OpenAI has scrapped a restructuring initiative that would have separated its for-profit and nonprofit arms. Chief Executive Officer Sam Altman announced the move today in a memo to employees. OpenAI launched in 2015 as a nonprofit artificial intelligence research lab. Four years later, it created a for-profit arm to lead its AI development and commercialization efforts. The investors who have backed OpenAI's multibillion funding rounds received stakes in the for-profit arm. Last year, the ChatGPT developer revealed plans to change its organizational structure. The initiative would have seen OpenAI restructure its for-profit arm as a public benefit corporation, or PBC. This is a type of business that balances shareholder interests with a public benefit interest. Additionally, OpenAI had reportedly planned to remove a clause that caps investors' returns. The AI developer today detailed a revised restructuring plan that includes all those steps, with one key difference. Under the original plan, the PBC created through the restructuring would not have been controlled by OpenAI's nonprofit parent organization. Under the new plan, the nonprofit will retain control. "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," Altman wrote in today's memo to employees. "We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners." Last month, a group of former OpenAI employees petitioned the two attorneys general to block the AI provider's original restructuring initiative. Earlier, Elon Musk sued OpenAI in California with the same goal. Musk's xAI Corp. competes with OpenAI. It's unclear how OpenAI's revised restructuring roadmap will affect its balance sheet. When the AI provider raised $6.6 billion last year, Axios reported that the participants in the round can ask for their money back if the restructuring initiative isn't completed within two years. The consortium that provided the capital included Thrive Capital, Microsoft Corp., Nvidia Corp., SoftBank Group Corp. and other high-profile backers. A few months after the deal, SoftBank announced plans to lead another $40 billion investment in OpenAI. The Japanese tech giant stated that it would provide up to three quarters of the sum. According to CNBC, the terms of the deal state that SoftBank can cut its investment from $30 billion to $20 billion if OpenAI doesn't restructure as an independent for-profit company by Dec. 31.. OpenAI's nonprofit parent organization will become a major stakeholder in the for-profit arm after it restructures as a PBC. The AI provider is hiring financial advisors to help it determine value of the nonprofit's stake. "As the PBC grows, the nonprofit's resources will grow, so it can do even more," Altman wrote in the memo. The change of course comes as OpenAI prepares to launch GPT-5, its next flagship AI system. Some of the system's features will be powered by o3, a reasoning model that debuted in April and has set records across several AI benchmarks. OpenAI plans to integrate GPT-5 into both the free and paid versions of ChatGPT.

OpenAI's nonprofit mission fades further into the rearview

OpenAI was founded as a nonprofit with a mission to build safe artificial general intelligence for the benefit of humanity. For a while, that structure made sense. But in 2019, the company made a discovery that changed everything: scaling up AI models -- with more data, compute, and parameters -- led to predictably stronger results. The insight was formalized in a 2020 paper titled "Scaling Laws for Neural Language Models," and it reshaped OpenAI's trajectory. That same year, the company released GPT-3, a model 100 times larger than GPT-2. Microsoft invested. Venture capitalists piled in. Inside the company, employees began to see Sam Altman as the one who could turn a nonprofit breakthrough into a world-changing -- and highly profitable -- business. And yet OpenAI remained a nonprofit company. Seen in that light, yesterday's announcement that OpenAI's for-profit arm will become a "public benefit company" (PBC) is no big surprise. Under the newly proposed structure, OpenAI will continue operating as a for-profit AI business housed within a nonprofit parent. (Altman said last year he wanted to free the for-profit from the nonprofit parent.)

OpenAI reverses course and says its nonprofit will continue to control its business

OpenAI is reversing course and said Monday its nonprofit will continue to control the business that makes ChatGPT and other artificial intelligence products. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," said CEO Sam Altman in a letter to employees. Altman and the chair of OpenAI's nonprofit board, Bret Taylor, said the board made the decision for the nonprofit to retain control of OpenAI. The nonprofit already has a for-profit arm, but that arm will be converted into a public benefit corporation "that has to consider the interests of both shareholders and the mission," Taylor said. OpenAI's co-founders, including Altman and Tesla CEO Musk, originally started it as a nonprofit research laboratory on a mission to safely build what's known as artificial general intelligence, or AGI, for humanity's benefit. Nearly a decade later, OpenAI has reported its market value as $300 billion and counts 400 million weekly users of ChatGPT, its flagship product. OpenAI faced a number of challenges in converting its core governance structure. One is a lawsuit from Musk, who accuses the company and Altman of betraying the founding principles that led Musk to invest in the charity.

OpenAI says its nonprofit will continue to control its business

After months spent pursuing a plan to convert itself into a for-profit business, OpenAI is reversing course and said Monday its nonprofit will continue to control the company that makes ChatGPT and other artificial intelligence products. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," said CEO Sam Altman in a letter to employees. Altman and the chair of OpenAI's nonprofit board, Bret Taylor, said the board made the decision for the nonprofit to retain control of OpenAI. The nonprofit already has a for-profit arm, but that arm will be converted into a public benefit corporation "that has to consider the interests of both shareholders and the mission," Taylor said. OpenAI's co-founders, including Altman and Tesla CEO Musk, originally started it as a nonprofit research laboratory on a mission to safely build what's known as artificial general intelligence, or AGI, for humanity's benefit. Nearly a decade later, OpenAI has reported its market value as $300 billion and counts 400 million weekly users of ChatGPT, its flagship product. OpenAI first outlined plans last year to convert its core governance structure but faced a number of challenges. One is a lawsuit from Musk, who accuses the company and Altman of betraying the founding principles that led Musk to invest in the charity. A federal judge last week dismissed some of Musk's claims and allowed others to proceed to a trial set for next year. OpenAI also faced scrutiny from the top law enforcement officers in Delaware, where the company is incorporated, and California, where it operates out of a San Francisco headquarters.

OpenAI to stay nonprofit, scrap proposed overhaul

The change won't comprise the ChatGPT-maker's ability to raise funds for development, CEO Sam Altman said. ChatGPT-maker OpenAI has abandoned plans to become a for-profit company and reaffirmed commitment to its nonprofit status. In a May 5 blog post, OpenAI confirmed plans to convert its for-profit business unit into a so-called Public Benefit Corporation (PBC), which would remain under the nonprofit's control. PBCs are for-profit companies that are legally obligated to prioritize a social mission alongside the interests of shareholders. The plans mark a reversal for OpenAI, which had previously floated a for-profit conversion involving spinning out the nonprofit entity. "OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit," the ChatGPT-maker said. This can be done without compromising OpenAI's ability to raise funds for AI development, which "currently requires hundreds of billions of dollars and may eventually require trillions of dollars," OpenAI's CEO, Sam Altman, said in a letter to employees announcing the decision. In 2024, OpenAI took a starkly different view, asserting that the for-profit entity was "necessary" for raising capital to amass the "vast quantities of compute" needed to run AI models. Related: OpenAI expects to 3X revenue in 2025 but Chinese AI firms are heating up OpenAI was originally founded as a nonprofit in 2015, and in 2019 it created a for-profit entity purportedly to help AI developers raise funds. The for-profit unit has remained under the nonprofit's control since then. In 2024, Tesla CEO Elon Musk -- one of OpenAI's cofounders -- sued Altman for allegedly "violating terms of Musk's foundational contributions to the charity," according to a November court filing. In the lawsuit, Musk alleges Altman "assiduously manipulated Musk into co-founding their spurious nonprofit venture, OpenAI," while secretly planning to convert OpenAI to a for-profit entity. Musk has since launched xAI, the developer of AI chatbot Grok, which he said has fallen victim to OpenAI's allegedly anti-competitive practices. OpenAI's leadership expects its revenue to hit $29.4 billion by 2026, Bloomberg reported in March. It forecasts earning revenues of $12.7 billion in 2025. In March, OpenAI raised $40 billion from Softbank at a $300 billion valuation.

OpenAI Reverses Course and Says Its Nonprofit Will Continue to Control Its Business

After months spent pursuing a plan to convert itself into a for-profit business, OpenAI is reversing course and said Monday its nonprofit will continue to control the company that makes ChatGPT and other artificial intelligence products. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," said CEO Sam Altman in a letter to employees. Altman and the chair of OpenAI's nonprofit board, Bret Taylor, said the board made the decision for the nonprofit to retain control of OpenAI. The nonprofit already has a for-profit arm, but that arm will be converted into a public benefit corporation "that has to consider the interests of both shareholders and the mission," Taylor said. OpenAI's co-founders, including Altman and Tesla CEO Musk, originally started it as a nonprofit research laboratory on a mission to safely build what's known as artificial general intelligence, or AGI, for humanity's benefit. Nearly a decade later, OpenAI has reported its market value as $300 billion and counts 400 million weekly users of ChatGPT, its flagship product. OpenAI first outlined plans last year to convert its core governance structure but faced a number of challenges. One is a lawsuit from Musk, who accuses the company and Altman of betraying the founding principles that led Musk to invest in the charity. A federal judge last week dismissed some of Musk's claims and allowed others to proceed to a trial set for next year. OpenAI also faced scrutiny from the top law enforcement officers in Delaware, where the company is incorporated, and California, where it operates out of a San Francisco headquarters. Attorney general offices in both states did not immediately return requests for comment. A number of advocates, including former OpenAI employees and other charities, had petitioned California Attorney General Rob Bonta and Delaware Attorney General Kathy Jennings, both Democrats, to use their authority to protect OpenAI's charitable purpose and block its planned restructuring. Some were concerned about what happens if the ChatGPT maker fulfills its ambition to build AI that outperforms humans, but is no longer accountable to its public mission to safeguard that technology from causing grievous harm. Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

OpenAI ditches plan to become a for-profit company

OpenAI will reverse course on its plans to convert into a for-profit business, announcing on Monday its nonprofit will continue to have control of the artificial intelligence firm. In a Monday letter to employees, CEO and co-founder Sam Altman said the company decided for the nonprofit to stay in control after hearing from civic leaders and holding discussions with the Attorney General Offices in California and Delaware. "OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit," Altman wrote. "That will not change. The non-profit's for-profit arm will transition to a public benefit corporation (PBC) that will "consider the interests of both shareholders and the mission," Bret Taylor, chair of OpenAI's nonprofit board, wrote in a blog post Monday. The nonprofit will control the PBC and be a "big shareholder in the PBC," which will give it the resources for more programs, Altman said. "And as the PBC grows, the nonprofit's resources will grow, so it can do even more. We're excited to soon get recommendations from our nonprofit commission on how we can help make sure AI benefits everyone -- not just a few," he said. "Their ideas will focus on how our nonprofit work can support a more democratic AI future, and have real impact in areas like health, education, public services, and scientific discovery. Altman said the structure "makes sense" for OpenAI, which he also said is "not a normal company and never will be." OpenAI first announced its goal to restructure the company last year stating at the time it needed to "raise more capital than we'd imagined." The decision hands a win to tech billionaire Elon Musk, who took great issue with the company's for-profit ambitions. Musk, an original co-founder of OpenAI, filed suit against Altman and OpenAI, alleging the company strayed from its roots to pursue profits over benefiting the public good. Musk escalated tensions earlier this year when he led a consortium of investors in submitting a $97.4 billion bid to buy the assets of the nonprofit in control of OpenAI. Musk in February said it is "time for OpenAI to return to the open-source, safety-focused force for good it once was." Altman quickly rejected this, stating OpenAI was "not for sale," and OpenAI's board of directors unanimously rejected the bid, which Musk's lawyer said the group would withdraw if OpenAI halted restructuring plans.

OpenAI Drops Plans to Go For-Profit, Shifts to a Public Benefit Model

Non-profit will remain the top governing body in the new setup OpenAI has dropped its plans to restructure as a for-profit company. On Monday, the San Francisco-based artificial intelligence (AI) firm announced that it would remain a non-profit entity following discussions with civic leaders and legal counsel from two US states. However, the company will transition its for-profit arm into a Public Benefit Corporation (PBC), which will allow it to continue raising capital to fund the development of new technologies. OpenAI said the PBC will be structured to serve both its mission and shareholders. In a blog post, OpenAI Chairman Bret Taylor said the decision to retain the non-profit structure came after conversations with civic leaders and the offices of the attorneys general of Delaware and California. The move also comes amid criticism from figures including Elon Musk and rival tech firms like Meta. The post included a letter from OpenAI CEO Sam Altman to employees and stakeholders outlining the company's revised direction. Emphasising the current demand for its technology, he said: "We currently cannot supply nearly as much AI as the world wants, and we have to put usage limits on our systems and run them slowly." Under the new structure, OpenAI's non-profit entity will govern the company as its largest shareholder, while the for-profit arm will be converted into a PBC that can generate returns for investors. OpenAI first set up a for-profit limited liability company (LLC) in 2019 to attract outside investment. The new PBC will aim to balance revenue generation with the company's stated mission. Notably, other AI firms such as Anthropic and xAI have also adopted a PBC model. The company will also eliminate its existing capped-profit mechanism. Previously, investors in OpenAI's commercial arm were subject to a 100x cap on returns, after which profits would be redirected to the non-profit. With the shift to a PBC, investors will instead hold standard equity, which can increase in value with the company's growth. Altman said this change is intended to support ongoing fundraising efforts to build infrastructure and pursue artificial general intelligence (AGI), which remains the company's long-term goal. "This is not a sale, but a change of structure to something simpler," he added. The non-profit will remain OpenAI's highest governing body and become a significant shareholder in the new PBC. The size of its holding will be determined by independent financial advisors, Altman said. Any proceeds received by the non-profit will be used to support AI programmes that "benefit many different communities, consistent with the mission."

'Our Mission Remains the Same': OpenAI Reverses Course, Says Its Nonprofit Will Remain in Control of the Business

This is a change from the company's announcement in December, which indicated that OpenAI would allow its for-profit business to one day have control over its own operations. Months after publicly stating its intention to shake up its corporate structure, OpenAI has reversed course and decided that its nonprofit arm will keep controlling its for-profit business. According to an OpenAI blog post published Monday, the company's board of directors decided that OpenAI will continue to rely on the oversight and control of its nonprofit division moving forward. "OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit," OpenAI board chairman Bret Taylor wrote in the blog post. "Going forward, it will continue to be overseen and controlled by that nonprofit." The company's for-profit LLC, which has lived under the nonprofit since 2019 and will continue doing so, will become a public benefit corporation (PBC). A PBC is a for-profit business that must consider the public good in addition to profit in its decisions. The nonprofit division of OpenAI will control and be the biggest shareholder in the PBC. "Our mission remains the same," Taylor noted. OpenAI's mission is "to ensure that artificial general intelligence benefits all of humanity." Related: Everyone Wants to Buy Google's Chrome Browser -- Including OpenAI, According to a Top ChatGPT Executive In December, OpenAI publicly indicated in a blog post that it was thinking about making its for-profit section a PBC, but one that had complete control over OpenAI's operations and business. The non-profit side would not oversee the for-profit, but would instead be in charge of charitable initiatives. Taylor wrote on Monday that OpenAI chose to reverse course and have the nonprofit retain control over the for-profit business after talking to civic leaders and with the offices of the Attorney General of Delaware and the Attorney General of California. More than 30 civic leaders, former OpenAI staffers, and Nobel laureates delivered letters to the offices of the attorneys general last month to ask that they stop OpenAI's effort to break from its non-profit governance. OpenAI has recently been embroiled in a legal battle with Elon Musk, who helped co-found the company and left in early 2018 following a failed bid to take it over. Musk has since filed lawsuits against OpenAI and its CEO, Sam Altman, accusing them of breaking OpenAI's founding agreement and working to maximize profits for Microsoft instead of humanity as a whole. Microsoft has invested close to $14 billion in OpenAI. Musk even led an unsolicited offer to buy OpenAI for $97.4 billion in February, which Altman quickly shot down on X. As of press time, Musk had yet to comment. Related: OpenAI Is Creating AI to Do 'All the Things That Software Engineers Hate to Do' OpenAI started as a nonprofit in 2015 and transitioned to a "capped profit" company in 2019, meaning that the company's profits were limited to a certain amount, with excess profits given to the nonprofit parent organization. The for-profit arm raised $1 billion from Microsoft in 2019, alongside a $100 million initial fundraising round. In November 2022, OpenAI launched its AI chatbot ChatGPT, which was used by 500 million global weekly users as of March, up from 400 million in February. OpenAI closed a $40 billion funding round in March, the biggest private tech deal ever, which valued the company at $300 billion.

OpenAI Scraps For-Profit Plans

OpenAI said it made the decision after consulting with the attorneys general of Delaware and California, who would have had to approve the for-profit transformation. ChatGPT maker OpenAI announced Monday that it will remain under control of its nonprofit board. Rather than transitioning toward a for-profit structure as planned, OpenAI said the limited liability corporation (LLC) that makes ChatGPT and its other AI tools will instead transition to a public benefit corporation (PBC) still controlled by its board. "OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit," it said. "That will not change." The PBC will be required to act in the interests of both its shareholders and its larger stated mission, while the nonprofit structure previously kept OpenAI's investors like Microsoft (MSFT) from having official input on matters like CEO Sam Altman's brief 2023 ouster as head of the company. OpenAI said Monday that the nonprofit will become a "big shareholder" in the PBC. OpenAI said it made the decision after consulting with the attorneys general of Delaware and California, who would have had to approve the for-profit transformation. "Altman said the changes proposed Monday would still allow it to access a $30 billion chunk of investment from SoftBank, which had been dependent upon the successful restructuring," The Wall Street Journal reported.

OpenAI dials back conversion plan, with nonprofit to retain control

OpenAI has dialed back a significant restructuring plan, with its nonprofit parent retaining control in a move that is likely to limit CEO Sam Altman's power over the pioneering maker of ChatGPT. The announcement follows a storm of criticism and legal challenges, including a high-profile lawsuit filed by rival and co-founder Elon Musk, who has accused OpenAI of straying from its founding mission to develop artificial intelligence for the benefit of humanity. "OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit. That will not change," Altman said in a blog post Monday.

OpenAI Reverses Course As Sam Altman Says Nonprofit Will Remain In Control Amid Elon Musk's Lawsuit And Investor Pushback - Microsoft (NASDAQ:MSFT), SoftBank Group (OTC:SFTBF)

On Monday, ChatGPT-parent OpenAI said that it will retain its nonprofit parent's control over its for-profit operations, scaling back a plan to transition fully to a public benefit corporation amid mounting legal pressure and investor concerns. What Happened: In a letter to OpenAI's employees that was shared in a blog post, Altman said that public benefit corporations have become the go-to for-profit model for AGI labs such as Anthropic and xAI, as well as mission-driven companies like Patagonia. "OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit. That will not change," OpenAI CEO Sam Altman said in a blog post. See Also: Skype Is Officially Retiring Today -- If You'd Invested $1,000 When Microsoft Bought It In 2011, Here's What You'd Be Sitting On Now Earlier this year, OpenAI announced that it plans to raise up to $40 billion in a round led by SoftBank Group SFTBF SFTBY at a $300 billion valuation. That round was reportedly contingent on OpenAI transitioning to a for-profit model by year-end. In a call with reporters, Altman hinted that he new structure does not jeopardize those plans, reported Reuters. He added that OpenAI would continue working with Microsoft Corporation MSFT, regulators and newly appointed nonprofit commissioners to finalize the plan. OpenAI Board Chair Bret Taylor said the updated approach follows discussions with civic leaders and the Attorneys General of California and Delaware. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Get StartedStart Futures Trading Fast -- with a $200 Bonus Join Plus500 today and get up to $200 to start trading real futures. Practice with free paper trading, then jump into live markets with lightning-fast execution, low commissions, and full regulatory protection. Get Started Why It's Important: The decision marks a shift from OpenAI's earlier proposal, which would have ceded control of the company's for-profit arm to shareholders under a public benefit corporation structure. That plan would have allowed for greater capital-raising flexibility but sparked criticism over whether OpenAI was drifting from its founding mission to develop artificial intelligence for the benefit of humanity. Instead, the nonprofit will continue to oversee the for-profit OpenAI LP while also becoming a significant shareholder in it. The change also comes as OpenAI faces a lawsuit from co-founder and Tesla Inc. TSLA CEO Elon Musk, who accused the company of abandoning its nonprofit mission. A jury trial in that case is scheduled for March 2026. A Musk-led consortium previously made a $97.4 billion acquisition offer for OpenAI, which CEO Altman promptly rejected. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: Charlie Munger Said Getting Rich Is Harder Than Ever, But Here's 'The Beauty Of It' -- You Only Have To Do It Once Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Image via Shutterstock MSFTMicrosoft Corp$435.690.09%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum72.58Growth64.49Quality39.11Value14.56Price TrendShortMediumLongOverviewSFTBFSoftBank Group Corp$52.706.46%SFTBYSoftBank Group Corp$26.300.54%TSLATesla Inc$278.20-3.14%Market News and Data brought to you by Benzinga APIs

OpenAI Drops Plan to Become a For-Profit Company After Pushback

Its for-profit LLC will become a Public Benefit Corporation, but it will be controlled by the non-profit entity. In an unusual move, OpenAI has ditched its plan to transition from a non-profit to a for-profit corporation. OpenAI chairman Bret Taylor says the company will continue to operate under the non-profit entity. Since last year, OpenAI has been working to make the company a Public Benefit Corporation (PBC) by removing the nonprofit's controlling stake, which drew criticism from many quarters as it made the nonprofit toothless. In a blogpost, OpenAI now says: OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit. Bret Taylor further writes that OpenAI's for-profit LLC will transition to a PBC that will "consider the interests of both shareholders and the mission." However, the non-profit entity will "control and also be a large shareholder of the PBC." Finally, Taylor emphasizes that the OpenAI mission will be the same for both the nonprofit and the PBC. OpenAI has acknowledged that the decision was taken after discussions with the offices of the Attorney General of Delaware and the Attorney General of California. Last month, Nobel laureate Geoffrey Hinton, popularly known as the "godfather of AI," along with several ex-OpenAI employees, opposed OpenAI's transition to a for-profit corporation. Hinton wrote to the Attorneys General of Delaware and California, urging them to block OpenAI's proposed restructuring. The letter specifically pointed out that OpenAI's founding principles and mission are at stake. OpenAI's mission is to build safe AGI that will be beneficial to all of humanity, not profit-driven investors. Elon Musk also sued OpenAI and Sam Altman, saying that OpenAI is abandoning its founding principles by transitioning to a for-profit company.

OpenAI to File Scaled-Back Restructuring That Keeps Nonprofit in Charge | PYMNTS.com

OpenAI said Monday (May 5) that it will submit a revised corporate plan that leaves its nonprofit parent firmly in control of the for-profit arm behind ChatGPT, walking back a December blueprint that would have ceded voting power in exchange for easier fundraising. The move follows weeks of discussions with the attorneys general of California and Delaware and is intended to "remain a nonprofit that oversees and controls the for-profit," Chief Executive Sam Altman wrote in a blog post. "When we started OpenAI, we did not have a detailed sense for how we were going to accomplish our mission," Altman wrote. "We started out staring at each other around a kitchen table, wondering what research we should do. Back then, we did not contemplate products, a business model. We could not contemplate the direct benefits of AI being used for medical advice, learning, productivity and much more, or the needs for hundreds of billions of dollars of compute to train models and serve users." Under the updated proposal, the nonprofit will retain board control while becoming the largest shareholder in a new public-benefit corporation. Board chair Bret Taylor said directors changed course after "hearing from civic leaders" and regulators, describing the adjustment as "extremely close" to the existing structure. Altman called the compromise "well enough for investors that they're happy to continue to fund us." Those investors have big checks in mind. In March, OpenAI told backers it hopes to raise as much as $40 billion in a SoftBank-led round that would value the company at roughly $300 billion, Reuters reported. Maintaining nonprofit control could complicate that effort but may help defuse a lawsuit from co-founder Elon Musk, who accuses OpenAI of straying from its public-interest mandate. The governance rethink comes as OpenAI pushes deeper into commerce. When the company rolled out new shopping tools for ChatGPT last month, as PYMNTS reported, it told users, "Search has become one of our most popular & fastest growing features, with over 1 billion web searches just in the past week." The upgrade lets consumers compare prices and click straight through to buy, signaling how quickly generative AI is moving from research lab to retail checkout.

What Is Going On At OpenAI?

Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on Seeking Alpha, iTunes, Spotify. Control over one of the biggest players in artificial intelligence keeps getting shuffled around, with OpenAI reshaping its corporate structure (again). It's a big deal, as OpenAI is one of the highest privately backed companies in the world and has been facing a notable lawsuit from founder Elon Musk (who sued to block the last conversion and now leads competitor xAI). Microsoft (MSFT) also holds a large stake in OpenAI, which announced plans in March to raise up to $40B at a $300B valuation. Backdrop: Since its founding in 2015, OpenAI's mission has been to develop cutting-edge AI technologies that would "benefit humanity as a whole, unconstrained by a need to generate financial return." Only a few years later, the non-profit formed a "capped profit" subsidiary, which eventually helped it attract the billions of dollars in investment that were needed to develop its large language models, ChatGPT, and other expensive generative AI offerings. A schism eventually grew between the OpenAI board skeptical of corporate expansion and CEO Sam Altman's business vision, leading to the latter's rapid ouster and subsequent reinstatement in 2023 following an employee revolt. That wasn't the end. OpenAI led by Altman later decided to spin off the non-profit division and convert itself into a for-profit firm, before settling on a "public benefit corporation," which would combine profit-making with social goals. AI safety concerns still lingered, prompting the company to take yet another turn. According to the newest structure, the non-profit will maintain oversight and retain a large ownership stake in the new public benefit corporation. The move was said to be decided upon after "hearing from civic leaders" and "engaging in dialog with AGs in Delaware and California" who had to sign off on the process. Sounds complicated? It is. The new structure means the public benefit corporation will have "non-profit control," though questions remain about the level of authority, while communications surrounding the move didn't provide too many more details. "I won't pretend that it wouldn't maybe be easier if we were a fully normal company, but the mission comes first," Altman declared. "We believe this is well over the bar of what we need to be able to fundraise... The nonprofit will continue to control the PBC, and will become a big shareholder in the PBC, in an amount supported by independent financial advisors."

OpenAI Reinforces Nonprofit Control Following Musk's $97B Takeover Attempt

On Monday, OpenAI stated that the organization would "continue to be overseen and controlled" by its nonprofit board. | Credit: Justin Sullivan / Getty Images. OpenAI has reversed its earlier plans to become a fully for-profit entity. In a blog post on Monday, the company announced that its nonprofit division will retain control over its for-profit operations, even as the organization transitions to a Public Benefit Corporation (PBC). The announcement comes after OpenAI rejected a $97.4 billion takeover offer led by Elon Musk, who has been a vocal critic of the company's restructuring plans. OpenAI Retains Nonprofit Status On Monday, OpenAI stated that the organization would "continue to be overseen and controlled" by its nonprofit board. Valued at $300 billion and backed by Microsoft, OpenAI said the decision followed consultations with civic leaders and lawmakers. The organization's for-profit arm, which has been under nonprofit control since 2019, will now become a PBC, a corporate structure that legally requires consideration of shareholder interests and a defined public mission. "Our mission remains the same, and the PBC will have the same mission," the company emphasized. Former Employees Push Back OpenAI's move comes amid mounting pressure from former employees and civil society organizations who opposed the proposed restructuring. In a letter sent last month to California and Delaware attorneys general, the group argued that transitioning to a for-profit model would "subvert OpenAI's charitable purpose" and eliminate essential governance protections. Page Hedley, a former employee and head of the watchdog group Not For Private Gain, said that although OpenAI appeared to have taken concerns seriously, "crucial questions remain." "Will OpenAI's commercial interests remain legally subordinate to its charitable mission?" she said in a statement . "And who will ultimately own the technology OpenAI develops?" she added. Musk vs. OpenAI OpenAI has been steadily commercializing its widely used AI technologies, such as ChatGPT and the video-generation tool Sora. However, efforts to transition into a for-profit organization have faced significant obstacles, particularly from early investor and current rival Elon Musk. OpenAI and Musk have been embroiled in a high-profile legal dispute since he left the company in 2018. Musk has launched several lawsuits against OpenAI, accusing the company of drifting from its original mission of prioritizing profit over public benefit. In February, a group of Musk-led investors submitted a $97.4 billion offer to acquire OpenAI's assets, arguing the move would realign the company with its open-source, safety-first origins. OpenAI's board firmly rejected the proposal, with CEO Sam Altman calling Musk's attempt a "tactic" to undermine the organization. Altman Dismisses Musk For AGI Speaking to journalists on Monday, Altman downplayed Musk's influence on the company's direction. "We are obsessed with our mission and what it takes to fulfill that," he said. "You all are obsessed with Elon -- that's your job, and more power to you. But we are here to focus on our mission, and that has not changed." In a letter to employees the same day, which was also shared in its blog post, Altman reiterated OpenAI's commitment to developing Artificial General Intelligence (AGI). "We now see a path for AGI to become the most capable tool in human history, empowering individuals directly," Altman wrote. "If we succeed, we believe people will build extraordinary things for one another and drive lasting improvements in society and quality of life."

Sam Altman's OpenAI ditches plan to become for-profit company after...

OpenAI is ditching a controversial plan to become a for-profit company, CEO Sam Altman revealed on Monday - a surprise move that came after the artificial-intelligence juggernaut faced fierce pushback from ex-employees, state officials and Elon Musk. The ChatGPT maker had earlier signaled plans to create a public benefit corporation that would have made it easier to raise cash. Instead, its nonprofit board will oversee a for-profit LLC that will restructure as a public benefit corporation "that has to consider the interests of both shareholders and the mission." Altman said OpenAI came to the decision "for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware. "We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners," Altman added. Aside from steering the company's direction, the nonprofit will become a "big shareholder" in the for-profit corporation. The restructuring will mean that employees - including potentially Altman himself - as well as investors and others will be able to hold shares in OpenAI's for-profit subsidiary. OpenAI is incorporated in Delaware and headquartered in San Francisco, California -- putting both states in a position to weigh in on its plans. Delaware Attorney General Kathy Jennings confirmed in a statement that she had raised concerns about OpenAI's original plans to become a for-profit. "I am encouraged by today's announcement that the Company is seeking to address my concerns with that reorganization by proposing instead a plan in which the Delaware non-profit entity retains control over the new for-profit entity," Jennings said. "Now that the Company has a new plan, I intend to review it for compliance with Delaware law by ensuring that it accords with OpenAI's charitable purpose and that the non-profit entity retains appropriate control over the for-profit entity," she added. The California attorney general's office did not immediately return a request for comment. Last month, a group that included ex-employees, Nobel Laureates like "Godfather of AI" Geoffrey Hinton, law professors and watchdog organizations like the Tech Oversight Project had asked both states to block OpenAI's for-profit plans. "The restructuring would remove nonprofit control and eliminate critical governance safeguards," the group said in a letter posted online and submitted to OpenAI's board. The move also has implications for the heated legal battle between Altman-led OpenAI and billionaire Elon Musk, who had been trying to stop OpenAI from becoming a for-profit company. Musk had accused OpenAI of abandoning its non-profit mission to build safe artificial intelligence to benefit humanity while transforming from a "tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon." The lawsuit also names key investor Microsoft, billionaire Reid Hoffman and others as co-defendants. In March, a federal judge shot down Musk's request for an injunction blocking OpenAI from restructuring to a for-profit - but said she could expedite a trial as early as this fall to consider other claims. Earlier this year, Musk made an unsolicited $97.4 billion offer to buy OpenAI, which was quickly rejected by Altman and his fellow board members. OpenAI's restructuring bid took shape after Altman was briefly ousted from the company in late 2023 after a dispute with the previous version of its nonprofit board. Altman later returned as part of an agreement that saw most of the old board depart. Investors had pushed for OpenAI to restructure in part because it would allow the company to incentivize Altman, who had not received compensation in the past, and to raise money in the future as it pursues artificial general intelligence - or AI with human-level or greater ability.

OpenAI reverses course and says its nonprofit will continue to control business | BreakingNews.ie

OpenAI has reversed course and said its nonprofit will continue to control the business that makes ChatGPT and other artificial intelligence products. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," said CEO Sam Altman in a letter to employees. Mr Altman and the chair of OpenAI's nonprofit board, Bret Taylor, said the board made the decision for the nonprofit to retain control of OpenAI. The nonprofit already has a for-profit arm, but that arm will be converted into a public benefit corporation "that has to consider the interests of both shareholders and the mission", Mr Taylor said. OpenAI's co-founders, including Mr Altman and Tesla CEO Musk, originally started it as a nonprofit research laboratory on a mission to safely build what is known as artificial general intelligence, or AGI, for humanity's benefit. Nearly a decade later, OpenAI has reported its market value as 300 billion dollars and counts 400 million weekly users of ChatGPT, its flagship product. OpenAI faced a number of challenges in converting its core governance structure. One is a lawsuit from Mr Musk, who accuses the company and Mr Altman of betraying the founding principles that led Mr Musk to invest in the charity.

OpenAI will remain under nonprofit control, pushes ahead with for-profit conversion

(Reuters) -OpenAI said on Monday it would remain under the control of its nonprofit parent, while pushing ahead with plans to change the structure of its for-profit arm to allow more capital-raising to keep pace in the artificial-intelligence race. The announcement follows a storm of criticism and legal challenges, including a high-profile lawsuit filed by rival Elon Musk, who has accused the company of straying from its founding mission to develop AI for the benefit of humanity. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," the startup said in a blog post. "We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners." The company had outlined plans in December to revamp its structure to become a public benefit corporation, saying that would help it to "raise more capital than we'd imagined," and remove the restrictions imposed on the startup by its current nonprofit parent. On Monday, OpenAI said the nonprofit parent will control the public benefit corporation and become a big shareholder in it. The move had raised concerns about whether OpenAI would allocate its assets to the nonprofit arm fairly, and how the company would strike a balance between making a profit and generating social and public good as it develops AI. The startup has been looking to make changes to attract further investment, as the expensive pursuit of artificial general intelligence, or AI that surpasses human intelligence, heats up. It said in March it would raise up to $40 billion in a new funding round led by SoftBank Group, at a $300 billion valuation. The round was contingent on the AI firm transitioning to for-profit by the end of the year. OpenAI's structure drew attention in November 2023 during one of the biggest boardroom dramas in Silicon Valley, where members of the nonprofit board ousted OpenAI co-founder and CEO Sam Altman over a breakdown in communication and loss of trust. He was reinstated after five days, following an outpouring of support from employees and investors. (Reporting by Arsheeya Bajwa in Bengaluru and Krystal Hu in New York; Editing by Alan Barona and Matthew Lewis)

OpenAI dials back conversion plan, nonprofit to retain control

(Reuters) -OpenAI has dialed back a significant restructuring plan, with its nonprofit parent retaining control in a move that is likely to limit CEO Sam Altman's power over the pioneering maker of ChatGPT. The announcement follows a storm of criticism and legal challenges, including a high-profile lawsuit filed by rival and co-founder Elon Musk, who has accused OpenAI of straying from its founding mission to develop artificial intelligence for the benefit of humanity. "OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit. That will not change," Altman said in a blog post on Monday. OpenAI had outlined plans in December to convert its for-profit arm into a public benefit corporation, a structure designed to balance shareholder returns with social goals, unlike nonprofits, which are solely focused on public good. Under that proposal, the nonprofit parent would have been a big shareholder in the PBC but would cede control over the startup. On Monday, OpenAI said the nonprofit parent would continue to control the PBC and become a big shareholder in it. The company will push ahead with plans to change the structure of its for-profit arm to allow more capital-raising to keep pace in the AI race. The move to an outright for-profit was intended to help OpenAI raise more capital and ease restrictions tied to its nonprofit parent. But it sparked concerns over whether the company would fairly allocate assets to the nonprofit and how it would balance profit-making with its mission to develop AI for the public good. "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware," Bret Taylor, chairman of OpenAI's board, said in a blog post, adding that the new announcement meant the startup would continue to have a structure "extremely close" to the current one. Altman called the move a compromise "that (works) well enough for investors that they're happy to continue to fund us to a degree we think we will need." He said OpenAI would work with major backer Microsoft, regulators and newly appointed nonprofit commissioners to finalize the updated plan. "We believe this is well over the bar of what we need to be able to fundraise," Altman said, adding there were "no changes to any existing investor relationships" and that the company would remove caps on the profit that investors can earn. He noted that public benefit corporations have become common at AI companies including rivals such as Anthropic, which is backed by Amazon as well as Alphabet's Google, and at Musk's xAI. But some questions remain over what exactly was changing and whether the move made it harder for OpenAI to raise capital as aggressively as it might have under a more conventional corporate structure. "We're glad that OpenAI is listening to concerns from civil society leaders ... but crucial questions remain," said Page Hedley, OpenAI's former policy and ethics adviser, and lead organizer of the group Not For Private Gain. "Will OpenAI's commercial goals continue to be legally subordinate to its charitable mission? ... Who will own the technology that OpenAI develops? The 2019 restructuring announcement made the primacy of the mission very clear, but so far, these statements have not," he said. He added he was concerned that in the current PBC structure, the board would be obligated to maximize shareholder value. EXPENSIVE AI As the expensive pursuit of artificial general intelligence, or AI that surpasses human intelligence, heats up, OpenAI has been looking to make changes to attract further investment. It announced in March it would raise up to $40 billion in a new funding round led by SoftBank Group, at a $300 billion valuation. The round was contingent on the AI firm transitioning to for-profit status by the end of the year, a structure that drew attention in November 2023 during one of the biggest boardroom dramas in Silicon Valley, where members of the nonprofit board ousted Altman over a breakdown in communication and loss of trust. He was reinstated after five days, following an outpouring of support from employees and investors. Altman said OpenAI would still be able to receive funding from the Japanese tech investor after Monday's move. SoftBank did not immediately respond to a request for comment, while Microsoft declined to comment. The announcement also raised questions over the future of Musk's lawsuit which sought to block OpenAI's transition away from nonprofit control, among other claims. A jury trial had been scheduled for March 2026. A consortium led by Musk had also made an unsolicited $97.4 billion bid for OpenAI earlier this year that was swiftly rebuffed by Altman with a "no thank you." (Reporting Krystal Hu in New York, Aditya Soni and Arsheeya Bajwa in Bengaluru and Anna Tong in San Franciso; Editing by Sayantani Ghosh and Matthew Lewis)

OpenAI scraps full for-profit shift, will remain under nonprofit control amid legal pressure

OpenAI CEO Sam Altman, in a message to staff, said OpenAI might eventually need "trillions of dollars" to make its services widely available. OpenAI has decided to stay under the control of its nonprofit arm, pulling back from its earlier plan to become a fully for-profit company. The decision comes after legal pressure, as well as discussions with government authorities. The company said that its business wing, which has been part of the nonprofit since 2019, will now move to a public benefit corporation (PBC). The nonprofit will oversee and own a large share of the PBC. "OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit," OpenAI announced in a blogpost. OpenAI said it made the decision after speaking with civic leaders and discussing with the Attorneys General of Delaware and California. "We thank both offices and we look forward to continuing these important conversations to make sure OpenAI can continue to effectively pursue its mission," the company said. Also read: Apple's services revenue at all-time high as company reports $95.4bn revenue for Q2 FY25 OpenAI CEO Sam Altman, in a message to staff, said OpenAI might eventually need "trillions of dollars" to make its services widely available. He also noted that the nonprofit will become a major shareholder in the PBC. "We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners," Altman wrote. For context, OpenAI was founded in 2015 as a nonprofit and switched to a "capped-profit" model in 2019 to attract funding. The company's plan to fully convert into a for-profit organisation drew criticism, including a lawsuit from Elon Musk. He claimed that the move went against the company's original goal to create AI that benefits all of humanity. Musk asked the court to stop OpenAI from going ahead with the conversion. While the judge didn't grant that request, the case is set for a jury trial in spring 2026.