OpenAI To Remove Non-Profit Control – Report

Changes continue a plenty at OpenAI, as the AI startup continues its negotiations with investors over a mammoth funding injection.

Reuters reported that OpenAI is planning to restructure into “for-profit benefit corporation”, that will also see CEO Sam Altman receive equity in OpenAI for the first time.

The commercial status of OpenAI was the subject of a lawsuit from Elon Musk, after he sued OpenAI in March for breach of contract, alleging the firm was no longer following its original non-profit principles.

For-profit benefit corporation

Musk abruptly withdrew the lawsuit without explanation in June, a day before a judge was due to rule on OpenAI’s request for it to be dismissed.

But in August Musk filed a “more forceful” lawsuit, alleging that that OpenAI and its co-founders Sam Altman and Greg Brockman had gone against the company’s founding principles by prioritising commercial interests over the public good.

OpenAI had earlier in the year issued a very public and point by point rebuttal of Musk’s allegations, by directly comparing them to Musk’s own words within his own emails.

Now Reuters, citing people familiar with the matter, reported that OpenAI is working on a plan to restructure its core business into a ‘for-profit benefit corporation’ that will no longer be controlled by its non-profit board – in a move that will make the company more attractive to investors.

It should be noted that the new structure of OpenAI would resemble that of its rival Anthropic and Elon Musk’s xAI, which are registered as benefit corporations.

According to the Reuters report, the OpenAI non-profit will continue to exist and own a minority stake in the for-profit company. The move could also have implications for how the company manages AI risks in a new governance structure.

Reuters noted that CEO Sam Altman will also receive equity for the first time in the for-profit company, which could be worth $150 billion after the restructuring as it also tries to remove the cap on returns for investors.

“We remain focused on building AI that benefits everyone, and 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,” an OpenAI spokesperson told Reuters.

Reuters reported that the proposed corporate structure of OpenAI is still being hashed out with lawyers and shareholders, and the timeline for completing the restructuring remains uncertain.

Executive exodus?

The restructuring at OpenAI comes amid a number of departures of senior executives at the AI firm.

OpenAI’s chief technology officer Mira Murati abruptly announced her departure from the company on Wednesday, alongside VP Research Barret Zoph and Chief Research Officer Bob McGrew.

In August, OpenAI co-founder John Schulman had tweeted on X (formerly Twitter) that he had joined rival AI company Anthropic AI.

Another co-founder, Greg Brockman, also tweeted on X in early August that he was taking a sabbatical through the end of the year.

A third co-founder, chief scientist Ilya Sutskever, left OpenAI in May and started his own AI company.

Days after Sutskever’s departure, his safety team co-leader Jan Leike also resigned and hit out at OpenAI for letting safety “take a backseat to shiny products.”

Former Apple designer Sir Jony Ive confirmed this week he is collaborating with OpenAI’s Sam Altman on an AI hardware start-up.

The project was first reported in September 2023, but Sir Jony has only now confirmed it in a New York Times profile about his activities since leaving Apple five years ago.