OpenAI has scrapped its controversial plan to become a for-profit company after mounting pressure from critics. CEO Sam Altman said OpenAI would remain under the control of its founding nonprofit board.
“We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware,” Altman wrote in an official OpenAI blog post announcing the latest restructuring decision.
OpenAI began as a nonprofit, but Altman has been proposing changes to its structure since his brief yet controversial ouster from the well-known AI research lab in November 2023—a move that shook Silicon Valley. Tesla CEO Elon Musk, a co-founder of OpenAI, has criticised the company in the past and even filed a lawsuit blocking the plan, accusing Altman of prioritising growth over the lab’s original mission of creating technology for the benefit of humanity. Musk now runs OpenAI’s, xAI.
In December, Altman announced plans to revamp OpenAI’s structure to become a public benefit company. At the time, the move raised concerns about whether OpenAI would allocate enough funds to its nonprofit arm and whether it would lead to greater corporate influence. But now, as part of the latest governance plan, the nonprofit parent will retain control over the public benefit corporation and become a major shareholder in it.
“The nonprofit will control and also be a large shareholder of the PBC, giving the nonprofit better resources to support many benefits,” the announcement said.
OpenAI had initially sought to restructure its core business into a for-profit benefit corporation last September—one that would no longer be under the control of its nonprofit board.
Had the proposed changes gone through, it would have made OpenAI more attractive to investors and aligned the lab’s structure with that of a traditional corporation. Under that plan, Altman would have received equity—reportedly around 7 percent—for the first time, marking a significant departure from his earlier stance of forgoing equity in line with OpenAI’s humanitarian mission.
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It’s not clear whether OpenAI’s new restructuring plan will appease critics—especially investors. In March, OpenAI secured $40 billion in funding from Japanese conglomerate SoftBank, which committed $30 billion directly. However, the new cash injection came with a catch: under the terms of the deal, SoftBank would reduce its commitment by $20 billion if OpenAI failed to restructure into a fully for-profit entity by the end of 2025.
OpenAI, which is backed by Microsoft, was recently valued at $300 billion in a funding round led by SoftBank.
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