OpenAI, the artificial intelligence research company, has dropped its plan to restructure into a for-profit entity. This decision comes after discussions with civic leaders and attorneys general from Delaware and California, who expressed concerns about the restructuring. The nonprofit parent company will continue to oversee the commercial subsidiary, now transitioning from a capped for-profit LLC to a public benefit corporation.
CEO Sam Altman stated that the earlier for-profit structure, limiting investor returns after achieving artificial general intelligence (AGI), seemed appropriate when a single dominant AGI effort was anticipated. However, the current landscape, with multiple successful AGI companies emerging, rendered the prior structure unsuitable.
This change marks a significant shift in OpenAI's governance and operational structure. The decision highlights the complexities and challenges involved in balancing the pursuit of profit with the responsible development and deployment of artificial intelligence.
OpenAI has been working for months to no longer be controlled by a nonprofit. It’s now giving up.
In a company blog post published on Monday, nonprofit board chairman Bret Taylor said that OpenAI is abandoning its plan to become controlled by a for-profit 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.” Both attorneys general have oversight of OpenAI’s nonprofit status and could have blocked its planned restructuring, which companies like Meta protested.
Now, OpenAI’s nonprofit parent company (the same one that briefly fired CEO Sam Altman) will continue to oversee its commercial subsidiary, which is being changed from a capped, for-profit LLC to a public benefit corporation.
In a memo to OpenAI employees, CEO Sam Altman said the current for-profit structure, which capped returns investors could receive after AGI is declared, “made sense when it looked like there might be one dominant AGI effort but doesn’t in a world of many great AGI companies.”
This story is developing…
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