OpenAI drops for-profit plans, restructures under nonprofit control
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The news: OpenAI has decided to retain nonprofit control of the company, scrapping a previous plan that would have shifted power to its for-profit arm.
On Monday (Tuesday AEST), the company said its for-profit LLC will become a public benefit corporation (PBC), but will continue to be “overseen and controlled” by the nonprofit, which will also be its largest shareholder. The nonprofit will appoint the PBC’s board, and its ownership stake will be determined by independent financial advisers.
It will also remove a cap on the financial returns its investors can earn, it said.
What they said: CEO Sam Altman told media in a briefing that the structure “sets us up to be a more understandable structure.”
“I won’t pretend that it wouldn’t maybe be easier if we were a fully normal company, but the mission comes first,” he added. “We believe this is well over the bar of what we need to be able to fundraise.”
The context: Critics of the previous plan included Elon Musk, who unsuccessfully asked a judge to block the change, and former employees who warned about balancing safety with commercialisation.
The decision followed feedback from civic leaders and discussions with the Attorneys General of California and Delaware, Altman said in a statement.
SoftBank is leading a USD40 billion funding round in OpenAI, which could be reduced to USD20 billion if the restructuring is not completed by the end of the year.
The sources: OpenAI release , Bloomberg, The New York Times, The Wall Street Journal
