OpenAI outlines plans to transition into a for-profit company
OpenAI, the leading artificial intelligence (AI) research lab, has outlined its plans to become a for-profit entity. The company's board, in a recent blog post, revealed that the current structure will be replaced by one that puts control in the hands of its for-profit division. The change will come into effect as we enter 2025, marking a major shift in OpenAI's operational model.
Non-profit sector to retain stake post-transition
As part of the transition, OpenAI will become a Public Benefit Corporation (PBC), a for-profit company designed to serve societal interests. This division will "run and control OpenAI's operations and business," the board said in a statement. The non-profit sector of OpenAI will still hold a stake in the business but won't have an oversight role, functioning independently with its own leadership team and staff.
Focus on charitable initiatives
Post-transition, OpenAI's non-profit side will focus on charitable work in fields such as healthcare, education, and science. The board believes this new structure will allow OpenAI to generate the capital it needs to advance artificial general intelligence. It also hopes to create "one of the best resourced nonprofits in history." Other AI companies like Anthropic and xAI also function as PBCs.
Aim to attract investors
The move to become a for-profit firm has been in the works for months as OpenAI looks for ways to attract investors and raise funds for its AI models. In September, Bloomberg reported that CEO Sam Altman would get around a 7% equity share as part of OpenAI's plans to become a for-profit firm, something Altman reportedly denied. The board said, "We once again need to raise more capital than we'd imagined."
Transition faces opposition from tech giants
Despite its plans, OpenAI could face legal hurdles in its transition to a for-profit entity. Elon Musk has filed a motion to prevent OpenAI from becoming a for-profit company. Similarly, Meta CEO Mark Zuckerberg has requested California Attorney General Rob Bonta to block the transition. These potential obstacles could impact the implementation of OpenAI's new operational model.
