ChatGPT maker OpenAI drops for-profit shift, reaffirms nonprofit control amid legal scrutiny

OpenAI, the organisation behind the GenAI chatbot ChatGPT, announced late on Monday it will retain its nonprofit status, foregoing previously proposed plans to restructure as a for-profit company. This decision comes in the wake of substantial legal opposition and public scrutiny, notably from co-founder Elon Musk, who filed a lawsuit alleging that the move would contravene OpenAI's foundational mission.

Originally established in 2015 as a nonprofit with the goal of ensuring artificial general intelligence (AGI) to the benefit of humanity, OpenAI introduced a "capped-profit" model in 2019 to attract necessary funding while attempting to stay true to its mission. The recent proposal aimed to transition the for-profit arm into a Public Benefit Corporation (PBC), allowing for greater investment opportunities. However, critics argued that this shift could compromise the organisation's commitment to public welfare.

In response to these concerns, OpenAI's nonprofit board will continue to oversee the organisation's operations, including its for-profit subsidiary, which will now be structured as a PBC. This arrangement is designed to balance the need for capital with the organisation's core mission. CEO Sam Altman emphasised that the decision was driven by a commitment to OpenAI's original goals, stating, “We're all obsessed with our mission.” The decision also addresses legal challenges from state attorneys general in California and Delaware, who had expressed concerns about the potential shift away from OpenAI's charitable objectives. Delaware Attorney General Kathy Jennings noted that her primary concern was ensuring that OpenAI's ultimate beneficiary remains the public.

While the restructuring allows for investor and employee equity stakes, the nonprofit's control is intended to safeguard against the prioritisation of profits over public interest. OpenAI continues to negotiate with key stakeholders, including Microsoft, to align on the specifics of this new structure. 

This development marks a significant moment in the ongoing discourse about the governance of organisations developing transformative technologies like AGI, highlighting the challenges of balancing innovation, investment, and ethical responsibility.