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OpenAI Announces Plan to Transform into a For-Profit Company
OpenAI has announced its plans to become a for-profit company, replacing its existing structure with one that puts control in the hands of its for-profit arm. The move is aimed at allowing OpenAI to raise the necessary capital to build towards artificial general intelligence (AGI) and create “one of the best resourced non-profits in history.”
As per the plan, OpenAI’s nonprofit will retain a stake in the business but lose its oversight role. A new Public Benefit Corporation (PBC) will take over the company’s operations and business, allowing it to raise capital from investors while also pursuing charitable initiatives in sectors such as healthcare, education, and science.
The move comes after months of speculation about OpenAI’s potential transition into a for-profit company. CEO Sam Altman is set to receive around a 7 percent equity stake in the new PBC, according to reports.
OpenAI has emphasized that this change will enable it to continue pursuing its mission while also attracting investors and capital necessary to achieve its goals. The board wrote in a blog post: “The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission.”
Concerns have been raised regarding the loss of control by OpenAI’s nonprofit board, particularly following last year’s controversy when Altman was temporarily ousted from his position before being reinstated. However, the new structure aims to provide a fair valuation determined by independent financial advisors, ensuring the nonprofit retains a stake in the business.
Despite these plans, OpenAI may still face opposition. Last month, Elon Musk filed a motion to stop OpenAI from becoming a for-profit company, while Meta CEO Mark Zuckerberg asked California Attorney General Rob Bonta to block the transition.
OpenAI’s competitors, including Anthropic and xAI, also operate as PBCs, indicating that this structure is not unprecedented in the AI industry.
Source: www.theverge.com
