OpenAI CEO and co-founder Sam Altman has purportedly informed some of the company’s shareholders that he’s contemplating altering its governance structure to transition into a for-profit company, as reported by The Information.
This change would mean that the company will no longer be controlled by its current non-profit board.
Why this matters. This potential shift represents a significant departure from OpenAI’s existing model and principles. The company, which is valued at around $86 billion, was originally established as a non-profit organization with the goal of “developing friendly AI to benefit humanity,” a mission that came under scrutiny after the success of ChatGPT.
The keys to transformation.
- OpenAI has a hybrid structure: A non-profit parent (OpenAI Inc.) controls several subsidiaries for commercial purposes, but with a cap on profit distributions to investors.
- Altman has reportedly told the board that one option he’s considering is to become a B Corp, a model used by rivals like Anthropic and xAI.
- This would allow OpenAI to pursue unlimited profits while maintaining a social purpose, but without the control of the current board.
- It would also pave the way for a possible IPO.
According to The Information, talks are still open and the outcome could be different.
Some context. OpenAI was established in 2015 as a non-profit corporation. It was initially supported by prominent individuals like Elon Musk, who later abandoned the project due to disagreements over strategy. In 2019, OpenAI formed a profit-capped subsidiary called OpenAI LP and received a $1 billion investment from Microsoft to advance its technology.
The success of ChatGPT in late 2022 increased OpenAI’s value and drew commercial interest. Microsoft quickly increased its investment with an additional $10 billion. However, critics stated that OpenAI was straying from its original mission of “democratizing AI” and putting a priority on profit.
Leadership changes. Altman recently reorganized the board, bringing in himself and allies such as Sue Desmond-Hellmann, the former CEO of the Gates Foundation. He also appointed Paul Nakasone, the former director of the NSA.
Final thoughts. OpenAI’s potential shift toward a purely commercial model represents a significant change for a company that was founded with the intention of using AI for the greater good.
Maintaining a charitable approach in an extremely competitive environment is increasingly challenging, and some worry that prioritizing unlimited profits could steer the company away from its original principles. The tug-of-war between idealism and practicality will determine the path forward for this major player in generative AI.
Image | Adobe Stock | Xataka using Midjourney
Related | OpenAI Has Just Undertaken a Challenging and Ambitious Journey: Understanding AI’s ‘Black Box’
View 0 comments