OpenAI today shared new details about its closely watched effort to change its organizational structure.
The ChatGPT developer also indicated that Microsoft Corp. has tentatively approved the initiative. The tech giant is one of OpenAI’s most important investors, having provided it with more than $13 billion in funding and cloud infrastructure over the past six years.
OpenAI launched in 2015 as a nonprofit artificial intelligence research lab. Four years later, it formed a for-profit arm called OpenAI LLC. That unit oversees the AI provider’s product development and commercialization programs.
In 2024, OpenAI launched an effort to turn into a for-profit company. The proposed restructuring drew scrutiny from the state attorneys general of California and Delaware, which led executives to scrap the initiative.
This past May, OpenAI Chief Executive Officer Sam Altman announced plans for a scaled-back reorganization. The initiative would see OpenAI’s nonprofit parent retain oversight of the for-profit arm that leads its commercialization efforts. At the same time, the plan proposes major changes to the way the for-profit arm is structured.
OpenAI board Chair Bret Taylor detailed today that the initiative would see the nonprofit receive an equity stake worth more than $100 billion in the for-profit arm. According to the executive, the nonprofit parent will use that capital to fund philanthropic programs. OpenAI plans to launch the first three of those programs in the near future.
“As part of this next phase, the OpenAI nonprofit has launched a call for applications for the first wave of a $50 million grant initiative to support nonprofit and community organizations in three areas: AI literacy and public understanding, community innovation, and economic opportunity,” Taylor wrote in a blog post.
The executive also indicated that Microsoft, one of OpenAI’s largest investors, has tentatively signed off on the plan. That preliminary approval was provided in the form of a nonbinding memorandum of understanding. ”We are actively working to finalize contractual terms in a definitive agreement,” Taylor wrote.
The proposed restructuring agreement also has other elements. It would turn OpenAI’s for-profit arm into a public benefit corporation, or PBC. A PBC is a company that must balance shareholder returns with the public interest. That structure is already used by Anthropic PBC, OpenAI’s best-funded startup rival.
OpenAI is also proposing to remove the profit caps that currently apply to its investors. Such a change might make it easier for the AI provider to raise new capital. OpenAI, which is not yet profitable, will need billions of dollars in additional funding to finance its fast-rising infrastructure costs.
Earlier this year, SoftBank Group Corp. announced plans to lead a funding round worth up to $40 billion in OpenAI. Nearly half of that investment is reportedly contingent on the successful completion of the AI provider’s restructuring initiative.
Photo: Focal Foto/Flickr
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