OpenAI's move away from nonprofit control could cost billions of dollars
OpenAI is negotiating to end its nonprofit parent company's oversight, according to four sources who spoke to the New York Times. The talks are complex and could cost billions of dollars.
The nonprofit currently holds significant control over OpenAI's operations, most notably the power to determine when the company reaches "artificial general intelligence" (AGI). This decision could terminate OpenAI's lucrative Microsoft partnership since the tech giant would lose direct access to AGI models. Sources say OpenAI is already trying to remove this AGI clause from its Microsoft agreements.
The negotiations are especially delicate because Sam Altman wears two hats - he's both OpenAI's CEO and a member of the foundation's board, placing him on both sides of the negotiating table.
One solution Altman has proposed would transform OpenAI into a public benefit corporation, balancing profit with social impact. This structure would let the nonprofit maintain partial ownership while focusing on AI ethics research, backed by substantial funding.
OpenAI's future on the negotiating table
The board is under intense pressure to move forward. Investors were promised an organizational overhaul within two years, and the latest funding round depends on this commitment. If the restructuring fails, OpenAI risks losing investor support. Success, however, could set the stage for an initial public offering.
The shift from non-profit to for-profit status has sparked pushback from tech industry leaders. Meta CEO Mark Zuckerberg has accused OpenAI of using its initial non-profit status to gain tax advantages before switching to a for-profit model. Tech billionaire and OpenAI co-founder Elon Musk took legal action, filing a lawsuit over the company's transformation which started in 2019.
OpenAI defends the change, saying it needed to become a for-profit company to raise the funds required to stay competitive while pursuing its core mission: developing artificial general intelligence that benefits humanity.
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