OpenAI provides commercial migration plans

OpenAI says its corporate structure must evolve to advance the mission of artificial general intelligence (AGI) — AI that can do most things humans can do — to benefit all of humanity.

OpenAI currently has a for-profit entity run by a non-profit organization with “limited profit” shares for investors and employees. But a blog post In a release on Friday, the company said it plans to spin off its common stock and OpenAI mission as a public benefit interest to existing for-profit Delaware Public Benefit Corporation (PBC).

These details were there reported elsewhere. The New York Times in December revealed OpenAI said it was in discussions to pay the nonprofit billions of dollars to relinquish control. However, this is the first time that OpenAI has made its offering public.

“As we move into 2025, we will need to become more than a lab and a startup – we need to be a sustainable company,” OpenAI said in its post. “The world is moving to build a new infrastructure of energy, land use, chips, data centers, data, AI models and AI systems for the 21st century economy. We are trying to develop to take the next step in our mission.”

OpenAI says the creation of the PBC will allow it to “balance shareholder interests, stakeholder interests and public benefit interests” in its decision-making, while also allowing it to “raise the necessary capital on conditional terms.” It will also create one of the best-resourced nonprofits in history, OpenAI claims; OpenAI’s existing non-profit organization will acquire a stake in PBC “at a fair valuation determined by independent financial advisors.”

“We have a non-profit and a for-profit organization today and will continue to have both,” OpenAI said. “Our current structure does not allow the board to directly consider the interests of those who would fund the mission, and it does not allow a nonprofit to do more than oversee a for-profit organization. PBC will manage and oversee OpenAI’s operations and business, while the non-profit organization will hire management and staff to implement philanthropic initiatives in sectors such as health, education and science.”

OpenAI was founded in 2015 as a non-profit research laboratory. But as his experiments became increasingly capital-intensive, he took outside investment from VCs and companies including Microsoft to create his current structure.

In October, OpenAI raised $6.6 billion at a valuation of $157 billion. The company still expects to lose money this year – $5 billion, according to to CNBC — and the terms of its latest funding round require it to complete its commercial transition within two years so that the investment doesn’t turn into debt.

The plan faces obstacles.

One of the co-founders of OpenAI is billionaire Elon Musk given Accusing OpenAI of abandoning its original philanthropic mission, it ordered the company to halt its for-profit transition. Musk also claimed that OpenAI was decapitalizing Musk’s artificial intelligence company, xAI, by extracting promises from investors not to fund it and the competition.

There is OpenAI he called Musk’s complaints are “baseless” and just a matter of sour grapes.

Facebook’s parent company and AI rival Meta also supports efforts to prevent OpenAI from turning from a nonprofit to a for-profit organization. Meta in December sent In a letter sent to California Attorney General Rob Bonta, he argued that allowing the change would have “seismic implications for Silicon Valley.”

“If OpenAI’s new business model is valid, non-profit investors will receive the same returns as those investing in for-profit companies in the traditional way, while also benefiting from government tax breaks,” Meta said in the letter. .

OpenAI competitors such as xAI and Anthropic are structured like PBC, but do not have a non-commercial component.

This is the structure of OpenAI as it exists today in the end It led to the sudden ouster of CEO Sam Altman last November. It also empowers the board to determine exactly when OpenAI acquires AGI, freeing that AGI from the company’s licensing agreements with customers.

One of those customers is Microsoft, and Microsoft and OpenAI are one specific, internal definition AI. According to The Information, the two companies signed an agreement last year that would allow OpenAI to achieve AGI only if it develops artificial intelligence systems capable of generating at least $100 billion in revenue.

OpenAI continues to experience an exodus of top talent, in part due to concerns that the company is prioritizing commercial products at the expense of security. One former employee, Carroll Wainwright, who researches the alignment of AI systems with security policies, wrote in an article. post At X this fall, OpenAI “was founded as a non-profit (but) operated as a for-profit” and “(shouldn’t) be trusted when it promises to do the right thing afterwards.”