non-profit

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

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

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.”

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

openai-defends-for-profit-shift-as-critical-to-sustain-humanitarian-mission

OpenAI defends for-profit shift as critical to sustain humanitarian mission

OpenAI has finally shared details about its plans to shake up its core business by shifting to a for-profit corporate structure.

On Thursday, OpenAI posted on its blog, confirming that in 2025, the existing for-profit arm will be transformed into a Delaware-based public benefit corporation (PBC). As a PBC, OpenAI would be required to balance its shareholders’ and stakeholders’ interests with the public benefit. To achieve that, OpenAI would offer “ordinary shares of stock” while using some profits to further its mission—”ensuring artificial general intelligence (AGI) benefits all of humanity”—to serve a social good.

To compensate for losing control over the for-profit, the nonprofit would have some shares in the PBC, but it’s currently unclear how many will be allotted. Independent financial advisors will help OpenAI reach a “fair valuation,” the blog said, while promising the new structure would “multiply” the donations that previously supported the nonprofit.

“Our plan would result in one of the best resourced nonprofits in history,” OpenAI said. (During its latest funding round, OpenAI was valued at $157 billion.)

OpenAI claimed the nonprofit’s mission would be more sustainable under the proposed changes, as the costs of AI innovation only continue to compound. The new structure would set the PBC up to control OpenAI’s operations and business while the nonprofit would “hire a leadership team and staff to pursue charitable initiatives in sectors such as health care, education, and science,” OpenAI said.

Some of OpenAI’s rivals, such as Anthropic and Elon Musk’s xAI, use a similar corporate structure, OpenAI noted.

Critics had previously pushed back on this plan, arguing that humanity may be better served if the nonprofit continues controlling the for-profit arm of OpenAI. But OpenAI argued that the old way made it hard for the Board “to directly consider the interests of those who would finance the mission and does not enable the non-profit to easily do more than control the for-profit.

OpenAI defends for-profit shift as critical to sustain humanitarian mission Read More »

openai-clarifies-the-meaning-of-“open”-in-its-name,-responding-to-musk-lawsuit

OpenAI clarifies the meaning of “open” in its name, responding to Musk lawsuit

The OpenAI logo as an opening to a red brick wall.

Enlarge (credit: Benj Edwards / Getty Images)

On Tuesday, OpenAI published a blog post titled “OpenAI and Elon Musk” in response to a lawsuit Musk filed last week. The ChatGPT maker shared several archived emails from Musk that suggest he once supported a pivot away from open source practices in the company’s quest to develop artificial general intelligence (AGI). The selected emails also imply that the “open” in “OpenAI” means that the ultimate result of its research into AGI should be open to everyone but not necessarily “open source” along the way.

In one telling exchange from January 2016 shared by the company, OpenAI Chief Scientist Illya Sutskever wrote, “As we get closer to building AI, it will make sense to start being less open. The Open in openAI means that everyone should benefit from the fruits of AI after its built, but it’s totally OK to not share the science (even though sharing everything is definitely the right strategy in the short and possibly medium term for recruitment purposes).”

In response, Musk replied simply, “Yup.”

Read 8 remaining paragraphs | Comments

OpenAI clarifies the meaning of “open” in its name, responding to Musk lawsuit Read More »