OpenAI nonprofit will retain control of the AI company

OpenAI CEO Sam Altman made the unicorn of unicorns. In just 10 years, he created a company valued at $300 billion, and in the process, delivered a new technology with potentially world-changing implications. And he’s had to do it all under the control of the OpenAI nonprofit. It’s a Silicon Valley dream come true, but also a capitalist’s nightmare scenario.

After previous moves to turn OpenAI into a for-profit enterprise, Altman revealed today an “updated plan for evolving [the company’s] structure.” In an open letter to OpenAI employees, the CEO confirmed that the OpenAI nonprofit will retain control over the for-profit LLC after all, a big victory for OpenAI’s critics.

In recent years, the nonprofit status of OpenAI has become one of the biggest controversies in Silicon Valley, thanks in large part to Elon Musk’s lawsuit against the company. Last year, Musk sued the ChatGPT maker for breach of contract based on its transition to a for-profit enterprise. Musk was one of the original backers of OpenAI, but after he left the company in 2018, Altman formed a “capped” for-profit LLC. Musk has been very critical of this decision, as have the attorneys general of both California and Delaware and a legion of AI skeptics.

As a result, OpenAI has maintained a strange corporate structure, with its nonprofit arm controlling its for-profit LLC. The LLC will now transition into a Public Benefit Corporation, or “a purpose-driven company structure that has to consider the interests of both shareholders and the mission,” according to OpenAI. Under this arrangement, OpenAI will be legally obligated to consider more than profit motives as it delivers AI products.

“We made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California,” wrote OpenAI board member Bret Taylor in a blog post. “We thank both offices and we look forward to continuing these important conversations to make sure OpenAI can continue to effectively pursue its mission of ensuring AGI benefits all of humanity. Sam wrote the letter below to our employees and stakeholders about why we are so excited for this new direction.”

In his open letter to OpenAI employees, Altman said he hopes to accomplish three things with the company’s evolution: First, to allow the company to attract new investments, to create the “largest and most effective nonprofit in history,” and “to deliver beneficial AGI.”

AGI, or artificial general intelligence, is a loosely defined concept with shifting goalposts, but according to OpenAI, it means “AI systems that are generally smarter than humans.”

And to pull off this feat, Altman says OpenAI may require trillions of dollars in additional resources.

“We want to be able to operate and get resources in such a way that we can make our services broadly available to all of humanity, which currently requires hundreds of billions of dollars and may eventually require trillions of dollars. We believe this is the best way for us to fulfill our mission and to get people to create massive benefits for each other with these new tools,” Altman wrote.