OpenAI previously planned to transform its organization from a non-profit to a profit-making enterprise and has now begun preliminary discussions with regulatory agencies in California and Delaware. While the transformation may make OpenAI more attractive to investors, many are wondering whether OpenAI will uphold its original mission of 'benefiting humanity' after becoming a profit-making enterprise, or if it will indeed become a 'profit-driven' company. We will have to wait and see.
Begin discussions with California and Delaware regulatory agencies about transformation.
With a market value of $157 billion, OpenAI is currently discussing with California regulators how to transform itself into a profit-making enterprise. Delaware's Attorney General Kathleen Jennings also wrote to OpenAI on 10/9, stating that if the company decides to transform, it needs to provide her with a detailed plan for review. This implies that regulators will closely examine how OpenAI will value its products (ChatGPT) to ensure transparency and legality during the transformation process.
OpenAI's journey has been fraught with difficulties.
Since its establishment in 2015, OpenAI has operated as a non-profit research organization, adhering to the principle of using AI to benefit all of humanity. In 2019, OpenAI established a capped-profit subsidiary called OpenAI LP to raise more funds to support its high development costs.
In 2023, CEO Sam Altman was dismissed by the board due to ongoing disputes over 'AI safety' and 'commercialization.' However, after news of his dismissal broke, it triggered strong dissatisfaction among internal employees and the industry, leading many OpenAI employees and supporters to call for the board to reinstate Altman. Under pressure, the OpenAI board compromised and brought Altman back to lead the organization. However, afterwards, many of OpenAI's senior executives also left to join other AI companies.
OpenAI plans to make money while doing public good.
In discussions with California regulators, OpenAI indicated that they plan to become a public benefit corporation, simply put, the company aims to make money while maintaining 'social good.' OpenAI's strategy officer Jason Kwon mentioned in a staff meeting at the end of September that the new corporate structure will retain a non-profit department, which will hold a portion of the profit company's shares. However, lawyers have also warned that the transformation is not that simple; it is necessary to ensure that the non-profit assets are used appropriately, which will complicate and prolong the review process.
(OpenAI's CTO Mira Murati and researchers have left, Taiwan's Mark Chen has been promoted)
Assuming the transformation is unsuccessful, funding could turn into debt.
OpenAI not only has to pass through California, but Delaware also requires OpenAI to submit a detailed plan for review. Additionally, the change in company structure must comply with local and federal tax regulations. If the transformation is not completed within two years, OpenAI's recent funding could turn into debt, creating more pressure. In summary, OpenAI is like a 'tightrope walker,' needing to find a balance between 'making money' and 'maintaining its original intention to benefit humanity,' which seems to present many challenges.
(OpenAI's new round of financing is valued at $157 billion, and will it be restructured as a profit-making enterprise?)
This article states that OpenAI will become a profit-making organization and has started dialogues with California regulators. It first appeared in Chain News ABMedia.
