Washington DC:
OpenAI, the developer of ChatGPT, on Friday announced plans for a new corporate structure that will move away from management by a nonprofit organization. This is a point of contention for artificial intelligence pioneers.
OpenAI was founded in 2015 as a nonprofit organization and has since switched to a “restricted” for-profit company, allowing for limited levels of revenue.
But the company is aiming to become a profit-making public corporation (PBC), which could attract more investment.
The company said in a blog post that it plans to reorganize as PBC, which “requires us to balance shareholder interests, stakeholder interests, and public interest in our decision-making.”
“This will enable us to raise the necessary funding on traditional terms, similar to the rest of the sector,” OpenAI added.
Noting that major companies are currently spending hundreds of billions of dollars to develop artificial intelligence, he said they will need to raise more money than they imagined.
“Investors want to back us, but at this size of capital, they don’t need as much traditional capital and bespoke structure,” OpenAI said.
Currently, the structure of boards does not allow them to directly consider the interests of those who fund their missions.
The company also said the structure “doesn’t make it easy for nonprofits to do more than manage for-profits.”
Under the reorganization, PBC will manage OpenAI’s operations and business.
The company’s nonprofit arm will create a team to advance philanthropy in areas such as health care.
OpenAI has garnered a lot of attention as a leading artificial intelligence company, recently valued at a staggering $157 billion.
The company, led by Sam Altman, has become one of the most successful startups in Silicon Valley history, hitting the headlines in 2022 with the release of ChatGPT, a generative AI chatbot.
However, the company’s corporate structure collapsed in late 2023 after the board abruptly fired Altman. Staffers fought back, and Mr. Altman was eventually reinstated, but those involved in his firing have left the company.
Alarmed by the situation, new investors are demanding that OpenAI become a more traditional for-profit organization within two years.
The company’s restructuring efforts are likely to face obstacles, with Elon Musk reportedly asking a US court to block OpenAI from turning it into a commercial company.
