External pressure is effective, OpenAI promises non-profit organizations "control"

Under pressure from leaders in various social sectors and former employees, OpenAI announced in a blog post on Monday that even if the company restructures as a non-profit, its non-profit organization will still retain control of the company. This Microsoft-backed company, valued at up to $300 billion in a recent financing round led by SoftBank, stated that this decision was made after discussions with the Attorney Generals of California and Delaware. Brett Taylor, Chairman of the OpenAI board, said in an interview, "According to the structure we envision, the non-profit organization will continue to control OpenAI. We will transform the limited liability company that serves as a subsidiary of the non-profit organization into a Public Benefit Corporation (PBC). This way, the ownership structure of the company will change, allowing employees, investors, and non-profit organizations to hold equity in this public benefit corporation." Taylor revealed that OpenAI has hired external financial advisors to provide advice on capital restructuring. While the non-profit organization will hold the majority of the company's shares, he refused to disclose the specific percentage. OpenAI CEO Sam Altman stated in a call, "The non-profit organization and the public benefit corporation will maintain the same mission, which I am very excited about." He also mentioned that the board of directors and stakeholders endorsed this decision. Currently, OpenAI is embroiled in a fierce legal dispute with Elon Musk. Musk co-founded OpenAI in 2015 as a non-profit research lab. Now, Musk runs his own startup xAI, competing in the field of generative artificial intelligence, and is trying to prevent OpenAI from transforming into a for-profit company. Altman was asked about this dispute in the call. He responded, "We are solely focused on our mission and how to achieve it. Our mission has never changed." Under Altman's leadership, OpenAI has been pushing for the commercialization of products in recent years, with the most notable being the ChatGPT chatbot, which gained popularity quickly after its launch at the end of 2022. The company is still regulated by a non-profit parent company. Due to Musk's obstruction, OpenAI has faced significant obstacles in its goal of restructuring into a for-profit company. In February of this year, a team led by Musk offered $97.4 billion to acquire OpenAI, but the proposal was quickly rejected. The hybrid structure of OpenAI includes a profit-capped limited partnership established in 2019. The original non-profit organization was the holding shareholder, and if the restructuring is successful, this non-profit organization will split into an independent entity. Now, with the restructuring plan changing, OpenAI's investors will receive convertible bonds that could be converted into equity in the future. Last month, a group of former OpenAI employees, Nobel laureates, law professors, and civil society organizations jointly wrote to the Attorney Generals of California and Delaware, urging them to halt the restructuring plan of this startup company for safety reasons. This letter was also submitted to the OpenAI board. It pointed out that restructuring into a for-profit entity would "violate OpenAI's charitable purpose," "remove the non-profit organization's control, and eliminate key governance safeguards." Paige Herdley, former policy and ethics advisor at OpenAI and head of the initiative "Not For Private Gain" in a statement, expressed that while OpenAI's willingness to address concerns is a positive step, "key issues still remain." One of the issues is whether OpenAI's commercial goals are still "legally subordinate to its charitable mission" and the other is "who will own the technology developed by OpenAI?" Taylor, in a call with reporters, explained that OpenAI's current structure includes a non-profit board and its subsidiaries, with the non-profit board being the sole governing body. He also shared some "technical details" about the composition of the board after the restructuring. In the future, the public benefit corporation will establish an independent board of directors, but the directors will be appointed by the non-profit organization. Taylor stated, "On the first day after the restructuring, we plan to have the same members on both boards." Taylor emphasized, "From a corporate governance perspective, the mission always comes first, as the trustees of the non-profit board are fully focused on this mission." He stated that this was one of the "major feedback" received after recent discussions. In a letter to employees attached to the Monday blog post, Altman wrote that OpenAI is still committed to ensuring the development of Artificial General Intelligence (AGI) technology that can match or surpass human intelligence for the benefit of all humanity. However, he also mentioned that there have been significant changes since the establishment of this lab nine years ago. Altman wrote, "When we founded OpenAI, we were not clear on how to achieve our mission. We could not imagine the direct benefits that artificial intelligence could bring in fields such as medical advice, learning, and productivity improvement, nor could we imagine the billions of dollars in computing resources needed to train models and serve users." Altman also mentioned that in order to "enable everyone to widely use our services," OpenAI may still need to raise trillions of dollars in funding in the future.