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OpenAI’s for-profit plan includes a public benefit corporation
In a recent announcement, OpenAI has revealed its plans to transform its for-profit arm into a Public Benefit Corporation (PBC) in 2025. This move would enable the company to raise capital with conventional terms, similar to its competitors such as Anthropic and xAI.
According to OpenAI’s blog post, this transformation is necessary to allow the company to pursue its mission and continue developing artificial general intelligence. The company estimates that it needs to raise hundreds of billions of dollars in new funding to achieve this goal, which would not be possible under its current non-profit structure.
As part of this restructuring, OpenAI’s nonprofit division will retain a stake in the for-profit unit by acquiring shares at a fair valuation determined by independent financial advisors. However, the nonprofit arm will no longer have direct oversight of the company.
Instead, the for-profit division will take on operational and business responsibilities, while the nonprofit arm will focus on charitable efforts in healthcare, education, and science. It is unclear whether CEO Sam Altman will receive an equity stake as part of this restructuring, following a brief period where he was removed from his position last year before being reinstated.
The company’s announcement has raised concerns among some stakeholders, including Meta, which has sent a letter to California’s attorney general urging him to block the conversion. Meta argues that OpenAI’s plan would be “wrong” and could lead to a proliferation of charitable organizations that are only pretending to be non-profit until they become profitable.
It is unclear how this move will affect OpenAI’s ongoing legal feud with Elon Musk, or what implications it may have for the company’s future operations. One thing is certain, however: OpenAI’s decision to restructure as a Public Benefit Corporation marks a significant shift in the company’s strategy and direction.
Source: www.engadget.com
