“OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit. That will not change,“ Altman said in a blog post on Monday.
On Monday, OpenAI said the nonprofit parent would continue to control the PBC and become a big shareholder in it. The company will push ahead with plans to change the structure of its for-profit arm to allow more capital-raising to keep pace in the AI race.
“We 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,“ Bret Taylor, chairman of OpenAI's board, said in a blog post, adding that the new announcement meant the startup would continue to have a structure “extremely close” to the current one. Altman called the move a compromise “that (works) well enough for investors that they’re happy to continue to fund us to a degree we think we will need.” He said OpenAI would work with major backer Microsoft, regulators and newly appointed nonprofit commissioners to finalize the updated plan, and decide how much equity stake in the for-profit business each party would receive.
“Will OpenAI's commercial goals continue to be legally subordinate to its charitable mission? Who will own the technology that OpenAI develops? The 2019 restructuring announcement made the primacy of the mission very clear, but so far, these statements have not,“ he said. He added he was concerned that in the PBC structure, the board would be obligated to maximize shareholder value.
As the expensive pursuit of artificial general intelligence, or AI that surpasses human intelligence, heats up, OpenAI has been looking to make changes to attract further investment. It announced in March it would raise up to $40 billion in a new funding round led by SoftBank Group, at a $300 billion valuation. The round was contingent on the AI firm transitioning to for-profit status by the end of the year, a structure that drew attention in November 2023 during one of the biggest boardroom dramas in Silicon Valley, where members of the nonprofit board ousted Altman over a breakdown in communication and loss of trust. He was reinstated after five days, following an outpouring of support from employees and investors.
SoftBank did not immediately respond to a request for comment, while Microsoft declined to comment.
The announcement also came amid a bitter legal battle brought by OpenAI co-founder Elon Musk, which sought to block OpenAI's transition away from nonprofit control, among other claims. A jury trial had been scheduled for March 2026. Musk's lawyer said there was no plan to drop the lawsuit against OpenAI. “The announcement obscures critical details about the supposed ‘non-profit control’ arrangement, and particularly the sharply reduced ownership stake the non-profit will receive in Altman’s for-profit enterprise - where the non-profit currently holds majority equity.” A consortium led by Musk had also made an unsolicited $97.4 billion bid for OpenAI earlier this year that was swiftly rebuffed by Altman with a “no thank you.”
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