OpenAI, the creator of ChatGPT, has announced the plan to restructure its organization to better balance its nonprofit and for-profit operations.
The company wants to address criticism and legal issues it has faced since creating a for-profit division in 2019 to raise funds for developing advanced AI models.
According to a blog post published on December 27, OpenAI is thinking about changing its for-profit business into a Delaware Public Benefit Corporation (PBC), a legal form for private companies creating public goods.
This legal structure requires companies to balance profits with the public good, ensuring decisions benefit both stakeholders and society. OpenAI says this change will help it secure funding more transparently and responsibly.
At the same time, OpenAI’s nonprofit arm will expand its efforts in areas like healthcare, education, and science by hiring a dedicated leadership team. The goal is to strengthen its charitable initiatives while maintaining the resources needed for innovation.
According to a court filing on Nov. 30, 2024, Tesla CEO Elon Musk, who co-founded OpenAI in 2015, sued the company’s executives, including CEO Sam Altman, for allegedly “violating provisions of Musk’s “foundational contributions to the charity.”
In 2024, Tesla CEO Elon Musk, who co-founded OpenAI in 2015, sued the company’s leadership, including CEO Sam Altman. Musk claims that Altman “intentionally courted and deceived Musk, preying on his humanitarian concern about AI,” and manipulated him into co-founding OpenAI. Musk alleges the company violated the terms of his contributions.
OpenAI defended its creation of a for-profit division, stating in a March blog post that it was “necessary” to raise the “vast quantities of compute” needed for AI models. Musk responded by launching xAI, accusing OpenAI of “anti-competitive” practices.
David Sacks, a close ally of Musk and the expected “White House AI and Crypto Czar,” criticized OpenAI in October, saying, “OpenAI has gone from nonprofit philanthropy to piranha, for-profit company.”
Looking ahead, AI agents, including ChatGPT-based models, are expected to play a larger role in decentralized technologies. J.D. Seraphine, CEO of Raiinmaker, said AI agents will “take on a more prominent role within decentralized communities,” with VanEck predicting over 1 million AI agents on blockchain networks by 2025.
Also Read: Microsoft to reduce reliance on OpenAI by using in-house AI Models
