- In a major development, OpenAI has dropped its restructuring plan to become a for-profit corporation.
- OpenAI chairman Bret Taylor says the company will be overseen and controlled by the non-profit entity.
- 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.
