OpenAI, the company behind ChatGPT, is planning to transform its core business into a for-profit benefit corporation. Announced on September 26, 2024, this move will shift control away from its non-profit board, making the company more appealing to investors. The non-profit will still exist but will hold a minority stake in the new for-profit entity.
The existing non-profit arm of OpenAI will still hold a minority stake in the new for-profit entity, the sources say. This restructuring could impact how OpenAI handles AI safety. It could also affect governance. CEO Sam Altman, who has not previously held any stake in OpenAI, will receive equity in the restructured company, which could be valued at $150 billion. Additionally, the move may lift current limits on investor returns. The sources shared this information on condition of anonymity due to the sensitive nature of the discussions.
An OpenAI spokesperson commented, “We remain focused on building AI that benefits everyone. We’re working with our board to ensure that we’re best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist.”
This proposal, first reported by Reuters, signals major governance shifts at OpenAI, one of the world’s most influential AI companies. Lawyers and stakeholders are still finalizing the restructuring details, and a timeline for completion is yet to be established, according to sources.
These changes are unfolding amidst leadership transitions. On Wednesday, OpenAI’s longtime Chief Technology Officer, Mira Murati, announced her departure, and OpenAI President Greg Brockman is also currently on leave.
OpenAI was founded as a non-profit AI research organization in 2015. In 2019, it created a for-profit subsidiary to attract investment. The subsidiary received funding from companies like Microsoft to accelerate its research. The release of ChatGPT in 2022 brought OpenAI global recognition, amassing over 200 million weekly active users, marking it as one of the fastest-growing apps ever and sparking intense global interest in AI investments.
AI Safety and Governance
OpenAI’s unique structure initially placed its for-profit subsidiary under the non-profit’s control. This ensured its mission of creating “safe AGI that is broadly beneficial.” However, the structure was thrust into the spotlight last year during a boardroom crisis. In a dramatic move, the non-profit board removed Altman, citing a breakdown in trust and communication. He was reinstated within five days, supported by employees and investors alike.
Since then, OpenAI’s board has been restructured, now chaired by Bret Taylor, former co-CEO of Salesforce and current head of his own AI startup. Any major corporate changes still require the approval of the nine-member non-profit board.
Investors have generally welcomed OpenAI’s push to operate more like a traditional startup, given the billions they’ve invested. However, some in the AI safety community worry that the company may lose accountability in its pursuit of AGI, especially after dissolving its superalignment team, which focused on long-term AI risks.
Altman’s equity in OpenAI is unclear. He has previously declined to hold shares in the company. He stated his commitment to a board with majority directors who have no stake in the company. He has also said he’s financially secure and motivated by a passion for the work.
The proposed restructuring aims to align OpenAI’s corporate form with its rivals. These rivals include Anthropic and Elon Musk’s xAI. Both are registered as benefit corporations. These entities aim to balance profit-making with broader social and environmental goals.
