On Monday, ChatGPT-parent OpenAI said that it will retain its nonprofit parent’s control over its for-profit operations, scaling back a plan to transition fully to a public benefit corporation amid mounting legal pressure and investor concerns.
What Happened: In a letter to OpenAI’s employees that was shared in a blog post, Altman said that public benefit corporations have become the go-to for-profit model for AGI labs such as Anthropic and xAI, as well as mission-driven companies like Patagonia.
“OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit. That will not change,” OpenAI CEO Sam Altman said in a blog post.
Earlier this year, OpenAI announced that it plans to raise up to $40 billion in a round led by SoftBank Group SFTBF SFTBY at a $300 billion valuation. That round was reportedly contingent on OpenAI transitioning to a for-profit model by year-end.
In a call with reporters, Altman hinted that he new structure does not jeopardize those plans, reported Reuters.
He added that OpenAI would continue working with Microsoft Corporation MSFT, regulators and newly appointed nonprofit commissioners to finalize the plan.
OpenAI Board Chair Bret Taylor said the updated approach follows discussions with civic leaders and the Attorneys General of California and Delaware.
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Why It’s Important: The decision marks a shift from OpenAI’s earlier proposal, which would have ceded control of the company’s for-profit arm to shareholders under a public benefit corporation structure.
That plan would have allowed for greater capital-raising flexibility but sparked criticism over whether OpenAI was drifting from its founding mission to develop artificial intelligence for the benefit of humanity.
Instead, the nonprofit will continue to oversee the for-profit OpenAI LP while also becoming a significant shareholder in it.
The change also comes as OpenAI faces a lawsuit from co-founder and Tesla Inc. TSLA CEO Elon Musk, who accused the company of abandoning its nonprofit mission. A jury trial in that case is scheduled for March 2026.
A Musk-led consortium previously made a $97.4 billion acquisition offer for OpenAI, which CEO Altman promptly rejected.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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