OpenAI scraps plans to transform into for-profit company

ChatGPT inventor OpenAI has reversed course on plans to transform into a for-profit company, announcing on Monday that it will remain under the control of its original non-profit entity.

The decision follows consultations with state attorneys general in California and Delaware, who could have moved to block the restructuring.
“OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit,” the company said in a statement.

The reversal raises questions about the future of OpenAI’s funding structure. Major investors, including Japan’s SoftBank, had backed the company on the condition it would transition to a profit-driven model by the end of the year.

Chief executive and co-founder Sam Altman told reporters on a call on Monday that SoftBank had no plans to reduce its funding.

Microsoft, which has invested almost $14 billion in the company, has not officially commented on the new plan.

The profit-oriented restructuring was originally intended to attract more investors as competition in the artificial intelligence (AI) sector intensified. It came after a period of turmoil in late 2023, when OpenAI’s board abruptly fired Altman, only to reinstate him weeks later following pressure from investors and staff.

The decision marks a victory for Elon Musk, an OpenAI co-founder, who now runs rival AI firm xAI. Musk, a vocal critic of the profit shift, has previously taken legal action to block the transformation.

Source: DPA International
--Agencies