OpenAI, the San Francisco-based artificial intelligence company, is contemplating a significant restructuring that could mark the end of its nonprofit status. Sources familiar with the matter have revealed that OpenAI’s board is currently deliberating a decision to transform the company into a public benefit corporation, a move that would make it accountable to shareholders. While OpenAI already operates a for-profit division, the majority of its staff is overseen by a nonprofit board dedicated to serving humanity. However, if the proposed change is implemented, the core structure of OpenAI would be converted into a public benefit corporation, which aims to generate profits while also benefiting society.
Although no final decision has been reached, OpenAI CEO Sam Altman confirmed that the company has been contemplating a restructuring during a recent tech conference in Italy. Altman clarified that the departure of key executives, including Chief Technology Officer Mira Murati, was unrelated to the potential restructuring. Altman emphasized that OpenAI would emerge stronger from these transitions. He dismissed rumors and misinformation surrounding the situation without providing further details.
OpenAI has assured that it will retain its nonprofit arm, stating that it remains committed to building AI that benefits everyone. However, Mozilla, a technology company known for its Firefox web browser, criticized OpenAI’s recent maneuvers, claiming that the company’s true long-term goal is profit rather than public interest. Mozilla President Mark Surman expressed doubts about OpenAI’s continued existence as a public interest organization.
The recent resignations of Murati, Chief Research Officer Bob McGrew, and research leader Barret Zoph are the latest in a series of high-profile departures from OpenAI. Earlier this year, co-founder Ilya Sutskever and safety team leader Jan Leike also resigned, with Leike criticizing OpenAI for prioritizing “shiny products” over safety.
OpenAI’s unique governance structure has been a source of conflict within the organization. Initially established as a nonprofit in 2015 with a mission to develop AI for the benefit of humanity, OpenAI has since evolved into a rapidly growing business still controlled by a nonprofit board committed to its original mission. Last year, Altman was briefly ousted as CEO due to a breakdown in trust between the board and top executives. However, with support from Microsoft, Altman was reinstated, and a new board was appointed.
Changing OpenAI’s corporate structure may prove challenging, as tax experts have suggested that the current setup allows the tax-exempt nonprofit entity to maintain full control over the for-profit entities created for the organization’s growth. OpenAI’s founders acknowledged the need for billions of dollars to finance the development of AI technologies, leading them to establish a for-profit corporation with profit limitations. The nonprofit and its board were entrusted with overseeing the new entity, with any excess profit intended to be directed back to the nonprofit. However, in practice, little money has been returned to the nonprofit in recent years.
OpenAI’s co-founder Greg Brockman has been on leave since August, leaving Altman as one of the few remaining early leaders at the helm. Tax law experts have highlighted the importance of the board fulfilling its fiduciary duties to ensure the effectiveness of OpenAI’s structure.