There has been talk of OpenAI potentially turning into a for-profit organization for some time now. Of course, this has brought controversy among detractors of the movement, including figures like Elon Musk and Mark Zuckerberg. Now, OpenAI has finally revealed more specific details about its plan to shift to a for-profit model.
This is OpenAI’s plan to transform into a for-profit organization
According to the official post, the artificial intelligence company plans to become a Public Benefit Corporation (PBC) sometime next year. This particular model involves making profits and revenues like a traditional organization would, but still maintaining a positive impact on society.
To accomplish this, OpenAI will maintain a nonprofit division running alongside the for-profit one. The nonprofit branch will no longer have oversight powers over the company’s developments. It will be dedicated to working on charitable projects for fields like health care, education, and science. This branch will operate independently, with its own leadership team. The nonprofit division will also have a number of shares allocated to it from the for-profit one to maintain a stake and a certain voice.
On the other hand, the for-profit branch will be in charge of everything related to “operations and business.” In other words, it will make decisions about the company’s future developments and projects. Analysts estimate that this particular division could be worth up to $150 billion.
A necessary change to compete, according to OpenAI
OpenAI stated that the change is necessary to continue evolving in the AI industry: “As we enter 2025, we will have to become more than a lab and a startup — we have to become an enduring company,” the blog post says. ChatGPT’s parent company also notes that direct competitors are registered as PBCs. The list includes xAI, Elon Musk’s AI-focused company.
Basically, OpenAI feels that maintaining its current model would leave it at a disadvantage in the industry. “[The move] would enable us to raise the necessary capital with conventional terms like others in this space,” the company says.
The company will have to overcome some obstacles
The transformation to a for-profit organization will not be a bed of roses for OpenAI. Elon Musk has been engaged in ongoing legal disputes with the company. Plus, Meta sent a letter to legislators urging them to prevent the move that OpenAI intends. Mark Zuckerberg’s company says that, if OpenAI succeeds, it could generate a wave of supposedly nonprofit companies that will really just wait to collect enough money to switch to for-profit.
