OpenAI Reverses Course, Confirms Non-Profit Sector Will Maintain Control of the Company | Technology

OpenAI has reversed its decision regarding the transition to a for-profit model, with the nonprofit sector continuing to oversee the operations that produce ChatGPT and other AI products. Initially, the company sought greater autonomy for its for-profit entities.

“We listened to feedback from civic leaders and consulted with the California Attorney General and the Delaware office before the nonprofit opted to retain control,” said CEO Sam Altman in a letter to employees. Bret Taylor, chair of Altman and OpenAI’s nonprofit board, affirmed that the decision was made to ensure the nonprofit maintains oversight of OpenAI.

According to a company press release, the segment of OpenAI’s for-profit organization led by Altman, which secured billions in funding, will aim for profit but will transition to a public benefit corporation. This corporate framework is mission-driven, requiring a balance between shareholder profit and public benefit. The nonprofit will continue to hold significant control as a major shareholder of these public benefit corporations.

Initially founded by Altman and Tesla CEO Elon Musk, OpenAI started as a nonprofit research organization with the goal of safely developing artificial general intelligence (AGI) for the benefit of humanity. Nearly a decade later, OpenAI boasts a valuation of $300 million and an impressive 400 million weekly users of its flagship product, ChatGPT.

OpenAI has encountered several challenges in restructuring its governance. A significant hurdle has been a lawsuit from Musk, who criticized the company and Altman for betraying the ethical principles that motivated his initial investment. Following his departure, Musk established a rival AI firm called Xai, which recently acquired Twitter, now known as X. OpenAI ultimately prevailed in its conflict with Musk, who has struggled in the wake of OpenAI’s growing success.