OpenAI said Tuesday it has reorganized its ownership structure and converted its business into a public benefit corporation after two crucial regulators, the Delaware and California attorneys general, said they would not oppose the plan.<\/p>\n
The restructuring paves the way for the ChatGPT maker to more easily profit off its artificial intelligence technology<\/a> even as it remains technically under the control of a nonprofit.<\/p>\n OpenAI CEO Sam Altman said in a call Tuesday that \u201cthe most likely path\u201d for the newly formed business is that it becomes publicly traded on the stock market, \u201cgiven the capital needs that we\u2019ll have and sort of the size of the company,\u201d though a Wall Street debut was not a part of the announcements detailed Tuesday.<\/p>\n Delaware Attorney General Kathy Jennings and California Attorney General Rob Bonta said in separate statements that they would not object to the restructuring, seemingly bringing to an end more than a year of negotiations and announcements about the future of OpenAI\u2019s governance and the power that for-profit investors and its nonprofit board<\/a> will have over the organization\u2019s technology. <\/p>\n The company also said it has signed a new agreement with its longtime backer Microsoft that gives the software giant a roughly 27% stake in OpenAI\u2019s new for-profit corporation but changes some of the details of their close partnership. Microsoft\u2019s $135 billion stake will be just ahead of the OpenAI nonprofit\u2019s $130 billion stake in the for-profit company. <\/p>\n The attorneys general of Delaware, where OpenAI is incorporated, and California, where it is headquartered, had both spent months investigating the proposed changes. <\/p>\n \u201cWe will be keeping a close eye on OpenAI to ensure ongoing adherence to its charitable mission and the protection of the safety of all Californians,\u201d said Bonta.<\/p>\n OpenAI said it completed its restructuring \u201cafter nearly a year of engaging in constructive dialogue\u201d with the offices in both states.<\/p>\n \u201cOpenAI has completed its recapitalization, simplifying its corporate structure,\u201d said a blog post Tuesday from Bret Taylor, the chair of OpenAI\u2019s board of directors. \u201cThe nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.\u201d<\/p>\n AGI stands for artificial general intelligence<\/a>, which OpenAI defines as \u201chighly autonomous systems that outperform humans at most economically valuable work.\u201d OpenAI was founded as a nonprofit in 2015<\/a> with a mission to safely build AGI for humanity\u2019s benefit. It later started a for-profit arm.<\/p>\n Microsoft invested its first $1 billion in OpenAI in 2019 and the two companies formed an agreement that made Microsoft the exclusive provider of the computing power needed to build OpenAI\u2019s costly technology. It was a lifeline for the startup research lab, which is now valued at $500 billion but continues to lose more money than it makes. In turn, Microsoft heavily used the technology behind ChatGPT to enhance its own AI products.<\/p>\n The two companies first revealed in January that they were altering that agreement, enabling San Francisco-based OpenAI to build its own computing capacity, \u201cprimarily for research and training of models.\u201d That coincided with OpenAI\u2019s announcements of a partnership with Oracle and SoftBank to build a massive new data center in Abilene, Texas. <\/p>\n It\u2019s since announced what Altman described Tuesday as a \u201c$1.4 trillion total financial obligation\u201d over the next few years, which includes more data center projects planned in the U.S., Asia, Europe and South America, along with big deals with chipmakers like Nvidia, AMD and Broadcom.<\/p>\n Those investments left Microsoft\u2019s OpenAI arrangement up in the air as the two companies appeared to veer further apart before reaching a tentative new agreement in September.<\/p>\n OpenAI had previously said its own nonprofit board will decide when AGI is reached, effectively ending its Microsoft partnership. But it now says that \u201conce AGI is declared by OpenAI, that declaration will now be verified by an independent expert panel,\u201d and that Microsoft\u2019s rights to OpenAI\u2019s confidential research methods \u201cwill remain until either the expert panel verifies AGI or through 2030, whichever is first.\u201d Microsoft will also retain commercial rights to OpenAI products \u201cpost-AGI\u201d and through 2032.<\/p>\n \u201cMicrosoft can now count on 7 years of runway,\u201d said an investor note from JP Morgan analysts, interpreting the news as a positive development for the software giant. <\/p>\n Microsoft put out the same joint announcement about the revised partnership Tuesday but declined further comment. Its shares spiked about 2% on Tuesday.<\/p>\n Going forward, the nonprofit will be called the OpenAI Foundation and Taylor said it would grant out $25 billion toward health and curing diseases and protecting against the cybersecurity risks of AI. He did not say over what time period those funds would be dispersed.<\/p>\n Robert Weissman, co-president of the nonprofit Public Citizen, said this arrangement does not guarantee the nonprofit independence, likening it to a corporate foundation that will serve the interests of the for-profit.<\/p>\n Even as the nonprofit\u2019s board may technically remain in control, Weissman said that control \u201cis illusory because there is no evidence of the nonprofit ever imposing its values on the for-profit.\u201d<\/p>\n The Delaware attorney general\u2019s investigation focused on ensuring OpenAI put its commitment to safety first and before any financial interests. Jennings also said OpenAI promised to keep its nonprofit in control of the public benefit corporation, including the right to appoint and remove its board members.<\/p>\n The removal of OpenAI\u2019s CEO Sam Altman in Nov. 2023 by the nonprofit\u2019s board at the time \u2014 and his subsequent reappointment \u2014 kicked off the company\u2019s effort to restructure. <\/p>\n The nonprofit\u2019s board will continue to include a Safety and Security Committee, which will have the power \u201cto oversee and review\u201d OpenAI\u2019s technology development. It will even have the power to stop the release of a new product, according to the Delaware attorney general\u2019s statement.<\/p>\n Additionally, within a year, the nonprofit\u2019s board will include at least two members who do not also serve on the public benefit corporation\u2019s board.<\/p>\n OpenAI still faces a legal challenge from billionaire Tesla CEO Elon Musk, an early OpenAI investor who now runs his own AI firm, xAI, and has accused the startup he co-founded of betraying its original mission.<\/p>\n A federal judge in March denied Musk\u2019s request for a court order blocking OpenAI from converting itself to a for-profit company<\/a> but said she could expedite a trial to consider Musk\u2019s claims<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"OpenAI said Tuesday it has reorganized its ownership structure and converted its business into a public benefit corporation…\n","protected":false},"author":2,"featured_media":43028,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[2208,6744,3013,25,11373,309,970,17491,140,1477,829,963,348,3580,26290,146,144,2680,3885,9500,26291,370,9492,134,1481,1246],"class_list":["post-43027","post","type-post","status-publish","format-standard","has-post-thumbnail","category-agi","tag-advanced-micro-devices","tag-agi","tag-artificial-general-intelligence","tag-artificial-intelligence","tag-bret-taylor","tag-business","tag-california","tag-delaware","tag-elon-musk","tag-general-news","tag-inc","tag-information-technology","tag-jpmorgan-chase-co","tag-maryland","tag-md-state-wire","tag-microsoft-corp","tag-nvidia-corp","tag-openai-inc","tag-oracle-corp","tag-rob-bonta","tag-robert-weissman","tag-sam-altman","tag-softbank-corp","tag-technology","tag-u-s-news","tag-world-news"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/43027","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=43027"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/43027\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/43028"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=43027"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=43027"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=43027"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}