OpenAI Unveils New For-Profit Model To Fuel AI Innovation And Stay Competitive (Image:X/OpenAI)
As the quest for artificial general intelligence reaches a fever pitch, OpenAI is breaking new ground with a radical overhaul of its corporate architecture that the maker of popular chatbot ChatGPT has announced plans to change its structure, as said in its blog post on Friday.
The company is set to create a public benefit corporation, making it easier to raise capital and remove restrictions imposed by its current nonprofit parent.
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OpenAI’s Board of Directors is evaluating our corporate structure with the goal of making a stronger non-profit supported by the for-profit’s success.
Our plan would create one of the best-resourced non-profits in history. https://t.co/6GvnMyCQmR
— OpenAI (@OpenAI) December 27, 2024
Currently, OpenAI operates as a nonprofit with a for-profit arm. However, this structure has limitations, particularly when it comes to raising funds.
The new structure will allow OpenAI to attract more investment which is essential for its expensive pursuit of artificial general intelligence.
The proposed changes will see OpenAI’s for-profit arm become a Delaware public benefit corporation. This type of company considers the interests of society in addition to shareholder value. The nonprofit arm will retain a significant interest in the public benefit corporation through shares.
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OpenAI’s decision to revamp its structure is driven by the need to raise more capital, as per the company as its latest funding round of $6.6 billion was contingent on changes to its corporate structure.
OpenAI’s rivals, such as Anthropic and xAI, have already adopted similar structures, allowing them to raise billions in funding.
The move is seen as a critical step for OpenAI to continue pursuing its mission. However, the company may face hurdles, including a lawsuit from co-founder Elon Musk who alleges that OpenAI violated contract provisions by prioritising profits over the public good.
Meta Platforms has also urged California’s attorney general to block OpenAI’s planned conversion to a for-profit company.
