OpenAI, the artificial intelligence research organization valued at approximately $157 billion, is moving closer to becoming a for-profit entity.
The company, known for its development of AI tools such as ChatGPT, has initiated early discussions with the California attorney general’s office regarding the steps needed to transition from a nonprofit to a for-profit structure, according to sources cited by Bloomberg. This structural change, if approved, would mark a significant shift for OpenAI, which originally launched as a nonprofit in 2015 with a focus on the safe and ethical development of AI.
As part of its transition to a for-profit model, OpenAI has engaged with regulators in California and Delaware, where it is incorporated, to ensure that its assets, including valuable intellectual property, are appropriately valued and distributed. California’s attorney general, Rob Bonta, is expected to review OpenAI’s restructuring proposal to ensure that the nonprofit’s assets continue to support its mission, even as it pursues a new corporate model.
OpenAI CEO Sam Altman, who has steered the company through substantial funding rounds, intends to retain a nonprofit arm within the restructured organization. This arm would hold a meaningful stake in the new for-profit entity, which would adopt the structure of a public benefit corporation (PBC). This approach is designed to enable the company to pursue profits while adhering to its original mission of responsible AI development.
Since 2019, OpenAI has operated a “capped-profit” subsidiary to raise funds for AI research and development, which has proven costly. The company recently secured $6.6 billion in funding, partly fueled by heightened investor interest from major corporations like Microsoft and Nvidia. With OpenAI now aiming for a more conventional for-profit structure, it may be able to better align with investor expectations while continuing to fund cutting-edge AI projects. Legal experts note that OpenAI’s transition is complex due to the need for transparent accounting of nonprofit assets and assurance that they will be used in alignment with the company’s social mission.
Bloomberg and Business Insider contributed to this report.
