OpenAI will remain a non-profit with control over for-profit business: Sam Altman

OpenAI has dropped its for-profit restructuring plans and will continue to operate under the control of its non-profit entity. The new for-profit LLC will be converted into a public benefit corporation (PBC), as was earlier planned, but will remain under the non-profit oversight. 

“OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit. That will not change,” CEO Sam Altman said in a blog post Monday.

In December 2024, OpenAI announced plans to create a PBC, a standard for-profit structure embraced by several AI firms including Anthropic and Elon Musk’s X.AI. This new entity was supposed to operate independently under Altman and would not be controlled by OpenAI’s non-profit board. 

Altman explains that the complex capped-profit structure made sense if there was only one dominant AGI effort. “In a world of many great AGI companies we are moving to a normal capital structure where everyone has stock,” he added. 

Founded in 2015 as a non-profit to build artificial general intelligence (AGI) to benefit all, OpenAI founding team included Sam Altman, Elon Musk, Ilya Sutskever and Greg Brockman among others. Musk left OpenAI in 2017 after reportedly failing to take control over the company. In 2019, OpenAI created a for-profit subsidiary to focus on commercial ventures and generate revenue that could be used to develop more advanced AI models.

The company’s decision to remain under the control of the non-profit can also be seen as an attempt to assuage internal tensions and external pressure the company has been facing from regulators and former co-founder Elon Musk, who has accused the company of deviating from its original mission and putting profits ahead of the public good. In August 2024, Musk filed a lawsuit against OpenAI to block the restructuring. 

The departure of several top executives, including Ilya Sutsekver and CTO Mira Murati, who have since started their own AI firms to build responsible AI, further suggests potential internal disagreement within the OpenAI leadership over the company’s original mission and commercial ambitions.

Last month, former OpenAI employees, lawyers, activists, Nobel laureate Geoffrey Hinton and former World Bank chief economist Joseph Stiglitz, sent a letter to attorneys general of California and Delaware seeking to block the restructuring. They argued that the shift to for-profit model would undermine the company’s founding mission to ensure AGI benefits all of humanity. 

“We made the decision for the non-profit to stay in control after hearing from civic leaders and having discussions with the offices of the attorneys general of California and Delaware,” said Altman in the blog post. He added that the company is looking to discuss the plan with its newly appointed non-profit commissioners.

It is believed that Altman’s decision to take control away from the non-profit was partly driven by the tensions between him and the non-profit board that fired him in November 2023. The board said at that time that it had lost confidence in Altman’s ability to lead the company as he was not “consistently candid in his communications” with them.

Altman was reinstated as CEO within weeks after investors and employees mounted pressure on the board. Following Altman’s return, a new board was appointed with an observer from Microsoft. 

Since the release of ChatGPT in October 2022 and the subsequent interest in generative AI apps, OpenAI’s valuation has crossed $300 billion. In January, SoftBank and Oracle announced plans to invest $500 billion under the Stargate Project over the next four years to build new AI infrastructure for OpenAI in the US. 

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