OpenAI says its nonprofit will remain in control of its for-profit business
OpenAI, the company behind ChatGPT, announced on Monday that its non-profit arm will continue to govern its profit-making operations. This decision comes as part of their ongoing restructuring plan.
Following a request from a California-based alliance of nonprofits, foundations, and labor organizations, the state’s attorney general has been urged to scrutinize OpenAI’s choice to transform its nonprofit‘s commercial subsidiary into a for-profit public benefit corporation. The coalition voiced worries about safeguarding OpenAI’s charitable resources in this transition.
In his letter to OpenAI employees, CEO Sam Altman explained that, following consultations with local authorities and the offices of both the California and Delaware Attorneys General, it was decided that the nonprofit organization would maintain its authority.
Initially established in 2015 as a non-profit research organization, OpenAI later gained recognition for creating innovative products such as ChatGPT and video-to-text tool Sora. As AI market competition intensified, OpenAI recognized the need to transform its structure to secure additional funding. Most recently, they successfully raised $40 billion, boosting their valuation to an impressive $300 billion. However, some of this funding could be affected if OpenAI fails to alter its corporate setup by year-end.
Business
The latest $40-billion investment round will bring the ChatGPT’s valuation to $300 billion.
OpenAI faced criticism over its transition strategies from companies like Meta and certain philanthropic figures, such as the San Francisco Foundation, who voiced their concerns to the state attorney general’s office. Additionally, one of its founders, Elon Musk, filed a lawsuit against the company.
On Monday, San Francisco Foundation said it continues to hold concerns about OpenAI’s transition.
In a statement, Fred Blackwell, CEO of the San Francisco Foundation, expressed that it’s good to notice OpenAI addressing the concerns about their restructuring plan. However, today’s announcement fails to tackle the main issue: ensuring the nonprofit arm of OpenAI remains financially independent from profit-making objectives.
This past month, the organization OpenAI appointed commissioners from a charitable foundation, which includes labor leader Dolores Huerta, with the aim of enhancing the charitable initiatives of OpenAI.
Hollywood Inc.
As a keen observer of the cinematic world of technology, I find myself drawn to scrutinize the ongoing legal tussle between Elon Musk and OpenAI. This clash could potentially reshape the star-studded landscape of artificial intelligence, one of the most captivating characters in our digital age.
OpenAI intends to progress its strategy as a public benefit corporation by maintaining dialogue with its investor Microsoft, local government officials, the attorneys general’s offices in California and Delaware, and the commissioners of non-profit organizations.
The declaration brings transparency to the initial strategies shared back in December, where they mentioned that a Public Benefit Corporation will oversee and manage OpenAI’s operations and commercial activities.
On Monday, Altman announced that the nonprofit board will acquire a substantial stake in the public benefit corporation, as advised by financial experts. This investment will provide the nonprofit with the necessary funds to back various programs, ensuring that artificial intelligence serves multiple communities, aligning with their mission.
Hollywood Inc.
On Wednesday, I joined forces with numerous nonprofits, foundations, and labor groups by signing a petition, which we then forwarded to the state attorney general. In this letter, we expressed our concerns and requested him to intervene, aiming to stop OpenAI from transforming its nonprofit commercial arm into a profit-driven corporation.
Altman affirmed that the nonprofit arm of OpenAI will retain its current control over the profit-driven part of the organization, a state of affairs which he emphasized will remain unaltered in the future.
AI companies like Anthropic and xAI founded with a public purpose, such as benefiting society, also include the efforts led by Elon Musk.
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2025-05-06 01:01