OpenAI has bowed to pressure from civic leaders and ex-employees, announcing in a blog post on Monday that its nonprofit would retain control of the company even as it restructures into a public benefit corporation.
The company, which is backed by Microsoft and was recently valued at $300 billion in a funding round led by SoftBank, said it made the decision after discussing the matter with the attorneys general of California and Delaware.
“With the structure we’re contemplating, the not-for-profit will remain in control of OpenAI,” Bret Taylor, OpenAI’s board chairman, said in a video call with 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 said OpenAI had commissioned outside financial advisors to consult on the recapitalization. He declined to share how much of a stake the nonprofit would have in the company, though it will be a majority.
OpenAI CEO Sam Altman said on the call that he was “very happy that the nonprofit and the PBC will have the same mission.” He said the board and stakeholders agreed with the decision.
OpenAI is currently engulfed in a heated legal battle with Elon Musk, who co-founded the group as a nonprofit research lab in 2015. Musk is trying to keep OpenAI from converting into a for-profit company as he competes in the generative AI market with his own startup, xAI.
Altman was asked about the dispute on Monday’s call.
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“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 — 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.”
Led by Altman, OpenAI has been commercializing products in recent years, most notably its viral ChatGPT chatbot, which was launched in late 2022. The company is still overseen by a nonprofit parent and has faced significant hurdles in its goal to restructure into a for-profit, due largely to Musk. A Musk-led group offered to buy OpenAI in February for $97.4 billion, a bid that was swiftly rejected.
OpenAI’s hybrid structure has included a capped-profit limited partnership that was created in 2019. The original nonprofit is the controlling shareholder and would have been spun out as an independent entity if OpenAI had succeeded in its efforts. With that change no longer taking place, OpenAI’s investors receive convertible notes that will turn into equity.
A group of ex-OpenAI employees, Nobel laureates, law professors and civil society organizations sent a letter last month to attorneys general in California and Delaware requesting that they halt the startup’s restructuring efforts out of safety concerns.
In the letter, which was delivered to OpenAI’s board, the group wrote that restructuring to a for-profit entity would “subvert OpenAI’s charitable purpose,” and “remove nonprofit control and eliminate critical governance safeguards.”
Page Hedley, OpenAI’s former policy and ethics advisor — and lead organizer of Not For Private Gain, the group that wrote the letter — said in a statement that while it’s a positive step that the company is listening to concerns, “crucial questions remain.” One is around whether OpenAI’s commercial goals will “continue to be legally subordinate to its charitable mission,” and another is, “Who will own the technology that OpenAI develops?” said Hedley, who is lead organizer of the group that wrote the letter.
Taylor said on the call with reporters that OpenAI’s current structure includes the nonprofit board and subsidiary, but that the nonprofit board is really the sole governing body. Taylor shared what he called a “technical detail” about the board makeup after restructuring
There will be a separate board for the public benefit corporation, but the nonprofit will appoint those directors, and “on day one, we plan on having the same directors for both,” Taylor said.
“From a governance standpoint, the mission comes first, because the fiduciary duty of the not-for-profit board is exclusively to that mission,” Taylor said. He said that was one “one of the main pieces of feedback” from recent conversations.
In a letter to employees that was part of Monday’s blog post, Altman said that OpenAI remains committed to ensuring that artificial general intelligence (AGI), which rivals or surpasses human intelligence, “benefits all of humanity.” But a lot has changed in the nine years since he co-founded the lab, he said.
“When we started OpenAI, we did not have a detailed sense for how we were going to accomplish our mission,” Altman wrote. “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.”
Altman said OpenAI may still need to pull in trillions of dollars for the resources necessary to “make our services broadly available to all of humanity.”
