Sam Altmans OpenAI ditches plan to become for-profit company after fierce pushback
OpenAI is ditching a controversial plan to become a for-profit company, CEO Sam Altman revealed on Monday – a surprise move that came after the artificial-intelligence juggernaut faced fierce pushback from ex-employees, state officials and Elon Musk.The ChatGPT maker had earlier signaled plans to create a public benefit corporation that would have made it easier to raise cash.Instead, its nonprofit board will oversee a for-profit LLC that will restructure as a public benefit corporation “that has to consider the interests of both shareholders and the mission.”Altman said OpenAI came to 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.“We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners,” Altman added.Aside from steering the company’s direction, the nonprofit will become a “big shareholder” in the for-profit corporation.
The restructuring will mean that employees – including potentially Altman himself – as well as investors and others will be able to hold shares in OpenAI’s for-profit subsidiary.OpenAI is incorporated in Delaware and headquartered in San Francisco, California — putting both states in a position to weigh in on its plans.Delaware Attorney General Kathy Jennings confirmed in a statement that she had raised concerns about OpenAI’s original plans to become a for-profit.“I am encouraged by today’s announcement that the Company is seeking to address my concerns with that reorganization by proposing instead a plan in which the Delaware non-profit entity retains control over the new for-profit entity,” Jennings said.“Now that the Company has a new plan, I intend to review it for compliance with Delaware law by ensuring that it accords with OpenAI’s charitable purpose and that the non-profit entity r...