OpenAI considers for-profit shift while maintaining nonprofit goals

OpenAI, the creator of ChatGPT, is reportedly in discussions with regulators in California and Delaware to explore a shift from its nonprofit status to a for-profit structure.

Currently valued at $157 billion, OpenAI is working with California Attorney General Rob Bonta's office and Delaware officials to evaluate the legal requirements and implications of this potential transformation.

One significant challenge OpenAI faces is valuing its primary asset—intellectual property.

According to California law, nonprofit assets must support charitable causes, complicating the valuation and potential reallocation.

OpenAI, which initially launched as a nonprofit in 2015, has emphasised its mission to develop beneficial AI while maintaining public safety.

OpenAI's nonprofit board chairman, Bret Taylor, assured Bloomberg that the nonprofit arm would continue in any new corporate arrangement.

"Any potential restructuring would ensure the nonprofit continues to exist and thrive and receives full value for its current stake in the OpenAI for-profit with an enhanced ability to pursue its mission," Taylor stated.

The nonprofit entity would, therefore, retain its focus on AI safety and ethical development.

OpenAI’s decision to explore a for-profit model also addresses the operational and financial demands of advanced AI research.

The company established a capped for-profit subsidiary in 2019, intending to attract investment while controlling costs, a strategy that has included notable investments from Microsoft.

Elon Musk, a co-founder and early backer of OpenAI, expressed concerns about this shift, citing a potential conflict with OpenAI's founding principles of transparency and open-source AI.

Musk’s recent statements emphasised the nonprofit’s original goal as a “counterweight” to large tech companies, which he felt was now diluted by profit motives.

These internal developments coincide with other changes in OpenAI’s leadership and staff, including the recent resignation of Miles Brundage, a safety researcher, who indicated plans to work on AI policy research.