OpenAI's history as a nonprofit research institute that also sells commercial products like ChatGPT may be coming to an end as the San Francisco company looks to more fully convert itself into a for-profit corporation accountable to shareholders.
The artificial intelligence company鈥檚 board is considering a decision that would change OpenAI into a public benefit corporation, according to a source familiar with the discussions who wasn鈥檛 authorized to speak publicly about them.
While OpenAI already has a for-profit division, where most of its staff works, it is controlled by a nonprofit board of directors whose mission is to help humanity. That would change if the company converts the core of its structure to a public benefit corporation, which is a type of corporate entity that is supposed to help society as well as turn a profit.
No final decision has been made by the board and the timing of the shift hasn鈥檛 been determined, the source said.
OpenAI鈥檚 CEO Sam Altman acknowledged in public remarks Thursday that the company is thinking about restructuring but said the the day before weren鈥檛 related.
Speaking at a tech conference in Italy, Altman mentioned that OpenAI has been considering an overhaul to get to the "next stage." But he said it was not connected to the Wednesday resignations of Chief Technology Officer Mira Murati and two other top leaders.
鈥淥penAI will be stronger for it as we are for all of our transitions,鈥� Altman told the Italian Tech Week event in Turin. 鈥淚 saw some stuff that this was, like, related to a restructure. That鈥檚 totally not true. Most of the stuff I saw was also just totally wrong,鈥� he said without any more specificity.
鈥淏ut we have been thinking about (a restructuring),鈥� he added.
OpenAI said Thursday that it will still retain a nonprofit arm.
鈥淲e remain focused on building AI that benefits everyone and as we鈥檝e previously shared we鈥檙e working with our board to ensure that we鈥檙e best positioned to succeed in our mission,鈥� it said in a written statement. 鈥淭he nonprofit is core to our mission and will continue to exist.鈥�
OpenAI is not the first technology company to try to balance commercial and humanitarian objectives but its maneuvers drew a rebuke Thursday from Mozilla, which blends a nonprofit foundation and research hub with a company known for making the Firefox web browser.
鈥淭he principled staff exodus at OpenAI is another example of their true long-term goal: profit,鈥� said Mozilla president Mark Surman in an emailed statement. 鈥淎s far as we can tell, OpenAI no longer exists as a public interest organization.鈥�
Altman asserted Thursday that the resignations of Murati, Chief Research Officer Bob McGrew and another research leader, Barret Zoph, were 鈥渏ust about people being ready for new chapters of their lives and a new generation of leadership."
But the exits were the latest in a string of recent high-profile departures that also include the resignations of OpenAI co-founder Ilya Sutskever and safety team leader Jan Leike in May. In a statement, Leike had leveled for letting safety 鈥渢ake a backseat to shiny products.鈥�
Much of the conflict at OpenAI has been rooted in its unusual governance structure. Founded in 2015 as a nonprofit with a mission to safely build futuristic AI to help humanity, it is now a fast-growing big business still controlled by a nonprofit board bound to its original mission.
This unique structure made it possible for four OpenAI board members 鈥� Sutskever, two outside tech entrepreneurs and an academic 鈥� to briefly last November in what was later described as a dispute over a 鈥渟ignificant breakdown in trust鈥� between the board and top executives. But with help from a powerful backer, Microsoft, Altman was brought back to the CEO role days later and a new board replaced the old one. OpenAI also put Altman of directors in March.
It may not be easy to change OpenAI鈥檚 corporate structure, even if it's designed to make investors and employees happy.
Tax experts have said that OpenAI鈥檚 corporate structure appeared to be set up to give the tax-exempt nonprofit entity full control of the for profit entities that the organization created as its growth started to take off.
In 2016, the goal of OpenAI鈥檚 founders 鈥� a group that included Altman and Tesla CEO Elon Musk 鈥� was to 鈥渁dvance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return.鈥�
A few years later, the organization realized it needed billions of dollars to finance the computing power required to develop AI technologies. 鈥淲e want to increase our ability to raise capital while still serving our mission, and no pre-existing legal structure we know of strikes the right balance,鈥� wrote co-founders Sutskever and Greg Brockman
So they set up a new for-profit corporation with a 鈥渃ap鈥� on the amount of profits that investors or employees could reap and put the nonprofit and its board in charge of the new entity.
Any 鈥渆xcess鈥� profit would go back to the nonprofit, Brockman and Sutskever explained, though in practice little money has gone back to the nonprofit in recent years. Brockman has been on leave since August, leaving Altman one of the few early leaders still at the helm.
In in February, Ellen P. Aprill, professor emerita of tax law at Loyola Marymount University, noted that OpenAI's structure appeared to be 鈥減ainstakingly鈥� designed to protect its nonprofit status.
All of its subsidiary corporations are governed or managed by the nonprofit and its board, and OpenAI says it warns investors that they may never receive a return.
However, Aprill and her colleagues pointed to Altman's ouster and reinstatement as evidence that the nonprofit鈥檚 board may not be meaningfully in charge. 鈥淯nless the members of the board fulfill their fiduciary duties... even the most carefully thought-out structures are for naught,鈥� Aprill and her co-authors wrote.
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The Associated Press and OpenAI have that allows OpenAI access to part of AP鈥檚 text archives.
Matt O'brien, Kelvin Chan And Thalia Beaty, The Associated Press
