OpenAI Scraps For-Profit Plans

ChatGPT maker OpenAI announced Monday that it will remain under control of its nonprofit board.

Rather than transitioning toward a for-profit structure as planned, OpenAI said the limited liability corporation (LLC) that makes ChatGPT and its other AI tools will instead transition to a public benefit corporation (PBC) still controlled by its board.

“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,” it said. “That will not change.”

The PBC will be required to act in the interests of both its shareholders and its larger stated mission, while the nonprofit structure previously kept OpenAI’s investors like Microsoft (MSFT) from having official input on matters like CEO Sam Altman’s brief 2023 ouster as head of the company. OpenAI said Monday that the nonprofit will become a “big shareholder” in the PBC.

OpenAI said it made the decision after consulting with the attorneys general of Delaware and California, who would have had to approve the for-profit transformation.

“Altman said the changes proposed Monday would still allow it to access a $30 billion chunk of investment from SoftBank, which had been dependent upon the successful restructuring,” The Wall Street Journal reported.

Tesla (TSLA) CEO Elon Musk, who co-founded OpenAI, has criticized the attempt to shift to a fully for-profit model as a betrayal of its original mission to work toward the benefit of humanity, and sued to block the transformation.