After months spent pursuing a plan to convert itself into a for-profit business, OpenAI is reversing course and said Monday its nonprofit will continue to control the company that makes ChatGPT and other artificial intelligence products.
鈥淲e made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware,鈥� said CEO Sam Altman in a letter to employees.
Altman and the chair of OpenAI鈥檚 nonprofit board, Bret Taylor, said the board made the decision for the nonprofit to retain control of OpenAI. The nonprofit already has a for-profit arm, but that arm will be converted into a public benefit corporation 鈥渢hat has to consider the interests of both shareholders and the mission,鈥� Taylor said.
However, Taylor declined to say Monday how large of an ownership stake the nonprofit will have in the new public benefit corporation. Altman said in a call with reporters that the nonprofit will choose the board members if the public benefit corporation.
Public benefit corporations were first created in Delaware in 2013 and other states have adopted the same or similar laws that require the companies to pursue not just profit but a social good. Public benefit corporations, which include Amalgamated Bank and the online education platform Coursera, need to define that social good, which can vary broadly, when they incorporate.
Altman said that converting from a limited liability company to a public benefit corporation 鈥渏ust sets up us to be a more understandable structure to do the things that a company of our scope has to do.鈥�
鈥淭here鈥檚 so much more demand to use AI tools than we thought there was going to be,鈥� Altman said. Getting access to more capital will make it easier for OpenAI to pursue mergers and acquisitions 鈥渁nd other normal things companies would do,鈥� Altman said.
Altman said it would 鈥渕aybe be easier鈥� to raise money if OpenAI were a 鈥渇ully normal company,鈥� but given its mission, 鈥渨e don鈥檛 want to be a fully normal company, and we believe this is well over the bar of what we need to be able to fundraise.鈥�
鈥淲e鈥檝e had plenty of investors who think OpenAI is a great business but don鈥檛 care about or don鈥檛 appreciate our mission, and, you know, we鈥檙e like happy not to have their money,鈥� Altman said.
OpenAI鈥檚 co-founders, including Altman and Tesla CEO Elon Musk, originally started it as a nonprofit research laboratory on a mission to safely build what鈥檚 known as , for humanity鈥檚 benefit. Nearly a decade later, OpenAI has reported its market value as $300 billion and counts 400 million weekly users of ChatGPT, its flagship product.
OpenAI first outlined plans last year to convert its core governance structure but faced a number of challenges. One is a , who accuses the company and Altman of betraying the founding principles that led Musk to invest in the charity. A federal judge last week dismissed some of Musk's claims and allowed others to proceed to a trial set for next year.
OpenAI also faced scrutiny from the top law enforcement officers in Delaware, where the company is incorporated, and California, where it operates out of a San Francisco headquarters. The California attorney general鈥檚 office said in a statement that it was reviewing the plan and, 鈥淭his remains an ongoing matter 鈥� and we are in continued conversations with Open AI.鈥�
The attorney general's office in Delaware did not immediately return a request for comment.
A number of advocates, including former OpenAI employees and other charities, had petitioned California Attorney General Rob Bonta and Delaware Attorney General Kathy Jennings, both Democrats, to use their authority to protect OpenAI鈥檚 charitable purpose and block its planned restructuring.
Some were concerned about what happens if the ChatGPT maker fulfills its ambition to build AI that outperforms humans, but is no longer accountable to its public mission to safeguard that technology from causing grievous harm.
Multiple other artificial intelligence companies have opted to incorporate as public benefit corporations, including Anthropic and xAI, Musk鈥檚 company. However, OpenAI would remain unique in that its public benefit corporation would still be controlled by the nonprofit鈥檚 board.
Matt O'brien And Thalia Beaty, The Associated Press
