OpenAI to become a for-profit organization, in talks with California regulators

OpenAI had previously planned to transition its company from a non-profit organization to a for-profit entity, and has now begun preliminary discussions with regulatory authorities in California and Delaware, USA. While the transformation may make OpenAI more attractive to investors, there are also concerns about whether, after becoming a for-profit company, OpenAI will uphold its original mission of "benefiting humanity," or if it will truly prioritize profit-making. Let's wait and see.

Starting Discussions with Regulatory Agencies in California and Delaware on Transformation

OpenAI, with a market value of $157 billion, is currently in discussions with regulatory agencies in California on how to transform its company into a profitable enterprise. The Attorney General of Delaware, Kathleen Jennings, also wrote a letter to OpenAI on October 9th, stating that if the company decides to transform, they must submit a detailed plan for her review. This means that regulatory agencies will carefully examine how OpenAI will evaluate its own product, ChatGPT, to ensure transparency and legality during the transformation process.

Challenges in OpenAI's Progress

Since its establishment in 2015, OpenAI has operated as a non-profit research organization, dedicated to using AI for the benefit of humanity. In 2019, OpenAI established a for-profit subsidiary with a capped profit called OpenAI LP to raise more funds to support its high development costs.

In 2023, due to ongoing disagreements with the board on issues such as "AI safety" and "commercialization," CEO Sam Altman was fired by the board. However, news of his dismissal sparked strong internal and industry dissatisfaction, leading many OpenAI employees and supporters to call for Altman's reinstatement. Facing public outcry, the OpenAI board compromised and brought Altman back to steer the company. Subsequently, several top executives at OpenAI resigned and moved on to other AI companies.

OpenAI's Plan to Make Money While Doing Good

In discussions with California regulatory agencies, OpenAI stated that they plan to become a benefit corporation, meaning the company aims to make money while maintaining a focus on "social good." Jason Kwon, Chief Strategy Officer at OpenAI, mentioned during a meeting at the end of September that the new company structure will retain a non-profit division, which will hold a stake in the for-profit entity. Legal experts also cautioned that the transformation is not simple and requires ensuring proper use of non-profit assets, making the review process complex and time-consuming.

OpenAI's CTO Mira Murati and researchers have left, while Taiwanese Mark Chen has been promoted.

If Transformation Fails, Financing Turns into Debt

OpenAI not only needs to pass the California hurdle but also submit detailed plans for review to Delaware. The structural changes in the company also need to comply with local and federal tax regulations. If the transformation is not completed within two years, recent financing for OpenAI could turn into debt, adding more pressure. In conclusion, OpenAI is like a "tightrope walker," needing to find a balance between "making money" and "upholding its original mission to benefit humanity," facing many challenges ahead.

OpenAI's latest funding round values the company at $157 billion, will it reorganize as a for-profit enterprise?