Meta has joined Elon Musk in urging California lawmakers to stop ChatGPT firm OpenAI from becoming a fully for-profit company.
OpenAI currently operates in a type of hybrid structure that includes a nonprofit and fully commercial arm. However, it’s been reported that the startup is currently in discussions with California regulators about becoming a fully for-profit entity.
In a letter to Attorney General Rob Bonta, first reported by The Wall Street Journal, Meta alleged that the transition would have “seismic implications for Silicon Valley.”
“If OpenAI’s new business model is valid, nonprofit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government,” read the letter to Bonta.
Earlier this month, Musk’s legal team asked the court for an injunction to prevent OpenAI from becoming a fully for-profit enterprise, claiming that “irreparable harm” will be caused if the injunction isn’t granted. The filing was the latest in a lawsuit initiated in March, which accused OpenAI of a variety of offenses including defrauding investors, wire fraud, and anti-competitive practices.
Meta’s letter showed support for Musk’s request for an injunction, saying that Musk and his co-plaintiff Shivon Zilis are “qualified and well-positioned to represent the interests of Californians in this matter.”
The latest legal action comes as OpenAI has hit back with new defenses against the Tesla CEO’s allegations. OpenAI released a variety of screencaps on its blog showing that Musk had at one point expressed openness to OpenAI embracing a for-profit structure. These screencaps have not yet been independently verified, noted the WSJ.
According to the OpenAI blog post, Musk sent an email to CEO Sam Altman saying the company’s “structure doesn’t seem optimal.”
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Musk went on to say that a “salary from the nonprofit muddies the alignment of incentives” and that it’s “probably better to have a standard C corp with a parallel nonprofit.” The Tesla CEO also allegedly forwarded an email about China investing heavily in AI research facilities, commenting: “Maybe another reason to change course.”
OpenAI’s blog also alleged that in 2018, Musk suggested that OpenAI merge with Tesla. Musk also allegedly sent an email to OpenAI executive Ilya Sutskever in 2017, suggesting a shareholding structure where he “would unequivocally have initial control of the company.” Musk has not responded to the allegations in OpenAI’s recent blog post at the time of writing.
Musk and Meta have had very public disputes in the past; with Musk even agreeing to fight CEO Mark Zuckerberg in a cage fight in 2023, later calling Zuckerberg “a chicken.”
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