OpenAI is ditching a controversial plan to grow to be a for-profit company, CEO Sam Altman revealed on Monday – a surprise move that got here after the artificial-intelligence juggernaut faced fierce pushback from ex-employees, state officials and Elon Musk.
The ChatGPT maker had earlier signaled plans to create a public profit corporation that might have made it easier to lift money. As a substitute, its nonprofit board will oversee a for-profit LLC that may restructure as a public profit corporation “that has to contemplate the interests of each shareholders and the mission.”
Altman said OpenAI got here to the choice “for the nonprofit to remain on top of things after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware.
“We look ahead to advancing the small print of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners,” Altman added.
Other than steering the corporate’s direction, the nonprofit will grow to be a “big shareholder” within the for-profit corporation. The restructuring will mean that employees – including potentially Altman himself – in addition to investors and others will find a way to carry shares in OpenAI’s for-profit subsidiary.
OpenAI is incorporated in Delaware and headquartered in San Francisco, California — putting each states able to weigh in on its plans.
Delaware Attorney General Kathy Jennings confirmed in a press release that she had raised concerns about OpenAI’s original plans to grow to be a for-profit.
“I’m encouraged by today’s announcement that the Company is searching for to handle my concerns with that reorganization by proposing as a substitute a plan during which the Delaware non-profit entity retains control over the brand new for-profit entity,” Jennings said.
“Now that the Company has a brand new plan, I intend to review it for compliance with Delaware law by ensuring that it accords with OpenAI’s charitable purpose and that the non-profit entity retains appropriate control over the for-profit entity,” she added.
The California attorney general’s office didn’t immediately return a request for comment.
Last month, a gaggle that included ex-employees, Nobel Laureates like “Godfather of AI” Geoffrey Hinton, law professors and watchdog organizations just like the Tech Oversight Project had asked each states to dam OpenAI’s for-profit plans.
“The restructuring would remove nonprofit control and eliminate critical governance safeguards,” the group said in a letter posted online and submitted to OpenAI’s board.
The move also has implications for the heated legal battle between Altman-led OpenAI and billionaire Elon Musk, who had been attempting to stop OpenAI from becoming a for-profit company.
Musk had accused OpenAI of abandoning its non-profit mission to construct protected artificial intelligence to profit humanity while transforming from a “tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon.” The lawsuit also names key investor Microsoft, billionaire Reid Hoffman and others as co-defendants.
In March, a federal judge shot down Musk’s request for an injunction blocking OpenAI from restructuring to a for-profit – but said she could expedite a trial as early as this fall to contemplate other claims.
Earlier this yr, Musk made an unsolicited $97.4 billion offer to purchase OpenAI, which was quickly rejected by Altman and his fellow board members.
OpenAI’s restructuring bid took shape after Altman was briefly ousted from the corporate in late 2023 after a dispute with the previous version of its nonprofit board. Altman later returned as a part of an agreement that saw many of the old board depart.
Investors had pushed for OpenAI to restructure partially because it could allow the corporate to incentivize Altman, who had not received compensation up to now, and to lift money in the long run because it pursues artificial general intelligence – or AI with human-level or greater ability.
OpenAI is ditching a controversial plan to grow to be a for-profit company, CEO Sam Altman revealed on Monday – a surprise move that got here after the artificial-intelligence juggernaut faced fierce pushback from ex-employees, state officials and Elon Musk.
The ChatGPT maker had earlier signaled plans to create a public profit corporation that might have made it easier to lift money. As a substitute, its nonprofit board will oversee a for-profit LLC that may restructure as a public profit corporation “that has to contemplate the interests of each shareholders and the mission.”
Altman said OpenAI got here to the choice “for the nonprofit to remain on top of things after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware.
“We look ahead to advancing the small print of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners,” Altman added.
Other than steering the corporate’s direction, the nonprofit will grow to be a “big shareholder” within the for-profit corporation. The restructuring will mean that employees – including potentially Altman himself – in addition to investors and others will find a way to carry shares in OpenAI’s for-profit subsidiary.
OpenAI is incorporated in Delaware and headquartered in San Francisco, California — putting each states able to weigh in on its plans.
Delaware Attorney General Kathy Jennings confirmed in a press release that she had raised concerns about OpenAI’s original plans to grow to be a for-profit.
“I’m encouraged by today’s announcement that the Company is searching for to handle my concerns with that reorganization by proposing as a substitute a plan during which the Delaware non-profit entity retains control over the brand new for-profit entity,” Jennings said.
“Now that the Company has a brand new plan, I intend to review it for compliance with Delaware law by ensuring that it accords with OpenAI’s charitable purpose and that the non-profit entity retains appropriate control over the for-profit entity,” she added.
The California attorney general’s office didn’t immediately return a request for comment.
Last month, a gaggle that included ex-employees, Nobel Laureates like “Godfather of AI” Geoffrey Hinton, law professors and watchdog organizations just like the Tech Oversight Project had asked each states to dam OpenAI’s for-profit plans.
“The restructuring would remove nonprofit control and eliminate critical governance safeguards,” the group said in a letter posted online and submitted to OpenAI’s board.
The move also has implications for the heated legal battle between Altman-led OpenAI and billionaire Elon Musk, who had been attempting to stop OpenAI from becoming a for-profit company.
Musk had accused OpenAI of abandoning its non-profit mission to construct protected artificial intelligence to profit humanity while transforming from a “tax-exempt charity to a $157 billion for-profit, market-paralyzing gorgon.” The lawsuit also names key investor Microsoft, billionaire Reid Hoffman and others as co-defendants.
In March, a federal judge shot down Musk’s request for an injunction blocking OpenAI from restructuring to a for-profit – but said she could expedite a trial as early as this fall to contemplate other claims.
Earlier this yr, Musk made an unsolicited $97.4 billion offer to purchase OpenAI, which was quickly rejected by Altman and his fellow board members.
OpenAI’s restructuring bid took shape after Altman was briefly ousted from the corporate in late 2023 after a dispute with the previous version of its nonprofit board. Altman later returned as a part of an agreement that saw many of the old board depart.
Investors had pushed for OpenAI to restructure partially because it could allow the corporate to incentivize Altman, who had not received compensation up to now, and to lift money in the long run because it pursues artificial general intelligence – or AI with human-level or greater ability.
