OpenAI announces plans to transition into a for-profit corporation
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OpenAI, the creator of ChatGPT, revealed on Friday its intention to restructure into a for-profit public benefit corporation (PBC), moving further away from its non-profit origins.
The decision comes as the artificial intelligence pioneer seeks to secure substantial investments needed to compete in the rapidly evolving AI industry.
Founded as a non-profit in 2015, OpenAI transitioned into a "capped" for-profit entity to enable limited revenue generation. However, the company now aims to restructure as a PBC, a corporate model requiring a balance between shareholder, stakeholder, and public benefit interests in decision-making.
In a blog post, OpenAI explained the shift is necessary to attract investors at the scale required for AI development, which now demands hundreds of billions of dollars. The current structure limits the board's ability to consider investor interests, hindering capital inflow.
"Investors are eager to support us, but they need conventional equity and fewer bespoke arrangements to operate at this scale," the company noted.
With the proposed restructuring, the PBC will oversee OpenAI's operations and business activities, while the non-profit arm will focus on charitable initiatives, including healthcare projects.
OpenAI, valued at $157 billion, has risen to prominence as a leading AI company. Under CEO Sam Altman, it has become one of Silicon Valley's most successful startups, driven by the global success of its ChatGPT chatbot, launched in 2022.
However, OpenAI has faced internal and external challenges. In late 2023, Altman was unexpectedly ousted by the board, sparking a staff revolt that ultimately led to his reinstatement. The incident raised questions about the company’s governance, prompting new investors to push for a more conventional for-profit structure within two years.
The restructuring plan may encounter resistance, including legal challenges. Elon Musk, a former OpenAI co-founder, has reportedly sought to block the transition in court, arguing against the conversion to a for-profit enterprise.
