OpenAI has decided that its nonprofit organization will continue to control the for-profit division. It had previously planned to turn into a regular for-profit company.
According to OpenAI representatives, their business unit, which has been subordinated to the nonprofit part of the organization since 2019, will be transformed into a Public Benefit Corporation (PBC). The nonprofit organization will remain the main owner and will control this corporation.
The decision was changed after consultations with civic leaders and Delaware and California attorneys general.
OpenAI was founded in 2015 as a nonprofit; in 2019, it became a so-called capped-profit company and retained a separate nonprofit structure that owns a controlling stake.
OpenAI explained its previous attempt to change the form of ownership to a for-profit company by saying that it was necessary to attract investments, which, in particular, were planned to be used for charitable projects. In return, the nonprofit part of the company would receive billions of dollars in profit as a major shareholder.
This idea was criticized. Among the critics was Elon Musk, one of OpenAI’s first investors. He filed a lawsuit accusing the company of betraying its original mission, which was to provide a common good for humanity through the development of artificial intelligence. He asked the court to stop the process of turning OpenAI into a profitable company. The judge refused, but the case will go to a jury in 2026.
OpenAI needs to complete its transformation into a commercial company by the end of this year or next year. Otherwise, it may lose some of its new investments.