OpenAI Abandons Plan To Become For-Profit Company
OpenAI CEO Sam Altman on Monday said the company behind ChatGPT would continue to be run as a nonprofit, as it abandoned a highly contested plan to turn into a for-profit organization.
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Major investors had demanded the adjustment to better ensure returns, and the issue had grown to be a serious point of dispute for the artificial intelligence pioneer.
Critics of AI, however, were concerned about the risks of trying to make large profits from such potent technology without the supervision of a nonprofit board of directors that acted in the public interest rather than to maximize profits for shareholders.
In an email to employees that was posted on the business' website, Altman stated, "After consulting with the offices of the Attorneys General of California and Delaware and hearing from civic leaders, we decided that the nonprofit should remain in control."
Critics of AI, however, were concerned about the risks of trying to make large profits from such potent technology without the supervision of a nonprofit board of directors that acted in the public interest rather than to maximize profits for shareholders.
In an email to employees that was posted on the business' website, Altman stated, "After consulting with the offices of the Attorneys General of California and Delaware and hearing from civic leaders, we decided that the nonprofit should remain in control."
In 2015, OpenAI was established as a nonprofit organization and established a "capped" for-profit business that permits a certain amount of profit-making.
For investors to feel more comfortable investing the tens of billions of dollars required to fulfill its promise, OpenAI would have transformed into a fully for-profit public benefit company (PBC) as part of its reform plan, which was unveiled last year.
However, co-founder Elon Musk and AI safety campaigners vehemently criticized the proposal, suing the business he departed in 2018 on the grounds that it violated its guiding principles.
Importantly, the idea needs approval from the state governments of Delaware and California, where the corporation is registered and has its headquarters, respectively.
For investors to feel more comfortable investing the tens of billions of dollars required to fulfill its promise, OpenAI would have transformed into a fully for-profit public benefit company (PBC) as part of its reform plan, which was unveiled last year.
However, co-founder Elon Musk and AI safety campaigners vehemently criticized the proposal, suing the business he departed in 2018 on the grounds that it violated its guiding principles.
Importantly, the idea needs approval from the state governments of Delaware and California, where the corporation is registered and has its headquarters, respectively.
The nonprofit board will still have oversight over OpenAI's capped money-making arm, but it will now be completely free to turn a profit.
This, Altman added, "sets us up to continue making rapid, safe progress and to put great AI in everyone's hands."
Under Altman's leadership, the business has grown to become one of Silicon Valley's most prosperous firms. In 2022, it made news with the introduction of ChatGPT, its generative AI chatbot.
When Altman was abruptly fired by the board in late 2023, its corporate structure collapsed. While those responsible for Altman's termination departed the company, employees protested and he was eventually reinstated.
This, Altman added, "sets us up to continue making rapid, safe progress and to put great AI in everyone's hands."
Under Altman's leadership, the business has grown to become one of Silicon Valley's most prosperous firms. In 2022, it made news with the introduction of ChatGPT, its generative AI chatbot.
When Altman was abruptly fired by the board in late 2023, its corporate structure collapsed. While those responsible for Altman's termination departed the company, employees protested and he was eventually reinstated.
Alarmed by the situation, new investors demanded that OpenAI become a more classic for-profit outfit within two years.
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