OpenAI has announced plans to restructure its organization as part of its commitment to ensuring Artificial General Intelligence (AGI) AI capable of performing tasks on par with human abilities, benefits all of humanity.
Currently operating as a for-profit entity under the control of a nonprofit, OpenAI follows a “capped profit” model that shares returns with investors and employees. The OpenAI restructuring aims to address this model’s limitations.
However, in a blog post, the company revealed its intent to transition its for-profit arm into a Delaware Public Benefit Corporation (PBC). The PBC would issue ordinary shares of stock and uphold OpenAI’s mission as its public benefit.
This restructuring aligns with prior reports, including a December New York Times article that disclosed OpenAI’s discussions to pay its nonprofit billions of dollars in exchange for relinquishing control. While details of the transition had surfaced earlier, this marks the first time OpenAI has outlined its proposal publicly.
“As we enter 2025, we will have to become more than a lab and a startup—we have to become an enduring company,” OpenAI stated. “The world is moving to build out a new infrastructure of energy, land use, chips, data centers, data, AI models, and AI systems for the 21st-century economy. We seek to evolve in order to take the next step in our mission.”
READ ALSO
Balancing Interests Through a PBC
According to OpenAI, establishing a PBC will allow it to balance shareholder, stakeholder, and public benefit interests while facilitating capital-raising under conventional terms. The company also claims that this OpenAI restructuring will create one of the best-resourced nonprofits in history, with OpenAI’s existing nonprofit receiving shares in the PBC at a fair valuation determined by independent financial advisors.
“We have a nonprofit and a for-profit today, and we will continue to have both,” OpenAI emphasized. “Our current structure does not allow the board to directly consider the interests of those who would finance the mission and does not enable the nonprofit to easily do more than control the for-profit. The PBC will run and control OpenAI’s operations and business, while the nonprofit will focus on charitable initiatives in sectors like healthcare, education, and science.”
A Shift Driven by Financial and Operational Demands
Founded in 2015 as a nonprofit research lab, OpenAI shifted to its current structure to accommodate increasingly capital-intensive projects. In October, the company raised $6.6 billion at a $157 billion valuation, bringing its total funding to $17.9 billion. Despite these investments, OpenAI expects to lose $5 billion this year, according to CNBC. The terms of its latest funding round require the company to complete the for-profit OpenAI restructuring within two years.
Opposition and Legal Challenges
The plan faces significant opposition. Billionaire Elon Musk, a co-founder of OpenAI, has filed for an injunction to block the restructuring, alleging that OpenAI is abandoning its original philanthropic mission. Musk has also accused OpenAI of extracting exclusivity commitments from investors, thereby depriving his AI company, xAI, of funding.
OpenAI dismissed Musk’s claims as “baseless,” attributing them to personal grievances. However, the resistance extends beyond Musk. Meta, Facebook’s parent company and an AI competitor, has also opposed the move, citing potential “seismic implications for Silicon Valley” in a letter to California Attorney General Rob Bonta. Meta argued that OpenAI’s proposed structure could allow nonprofit investors to gain for-profit returns while benefiting from tax advantages.
Internal Struggles
OpenAI’s current structure has been a source of tension, culminating in the controversial ousting of CEO Sam Altman last November. The decision, which reportedly upset key investors like Microsoft, highlighted the board’s power to determine when OpenAI achieves AGI—a milestone with significant financial and ethical implications.
Further complicating matters, OpenAI continues to grapple with internal concerns over its prioritization of commercial goals over safety. Former employee Carroll Wainwright criticized the restructuring approach in a public post, stating that OpenAI “was structured as a non-profit [but] acted like a for-profit” and cautioned against trusting the company’s long-term promises.
As OpenAI navigates its corporate transition, the outcome will likely shape the future of AI development and governance, raising critical questions about the balance between innovation, profitability, and ethical responsibility.
