After months of controversy and legal challenges, including a lawsuit from Elon Musk, OpenAI has decided to abandon plans to go fully commercial. Instead, it will continue to operate through a nonprofit arm, with the business side becoming a Public Benefit Corporation (PBC).
Image source: AI
OpenAI has changed its mind about going fully for-profit and has decided to retain control of its nonprofit arm, The Verge reported. “OpenAI was founded and is run as a nonprofit today,” said OpenAI Chairman Bret Taylor. “And that will continue to be the case.” The decision was made after consultation with the attorneys general of California and Delaware.
Recall that OpenAI was initially created as a non-profit organization, but later began to consider the possibility of transferring the company to a profit-oriented status in order to attract more investment. However, in 2019, it took an intermediate path – it switched to a capped-profit model, in which the commercial direction was under the control of a non-profit foundation. New attempts at radical reform towards full commercialization have caused widespread criticism.
Among those dissatisfied was one of the company’s early investors, Elon Musk. He filed a lawsuit, accusing the company of abandoning its original mission. According to him, OpenAI’s original goal was to make AI technologies available to all of humanity. The court rejected his request to stop the transformation, but the case is still open and will be heard in 2026.
Musk has received support from former OpenAI employees, human rights groups, and even Nobel laureates, who have written to attorneys general asking them to block the company’s transformation. Labor unions have also joined the protests.
It is unclear how the cancellation of the transition to a fully commercial basis will affect OpenAI’s funding. It was previously reported that without the transformation, the company could lose some of the investment it has raised.