OpenAI Outlines Transition to For-Profit Model

OpenAI has announced plans to restructure as a for-profit company. In a blog post on Friday, the company revealed that it will shift control to a new for-profit arm, replacing its existing structure.

By 2025, OpenAI intends to become a Public Benefit Corporation (PBC), a for-profit entity designed to serve societal good. This new division will oversee OpenAI’s operations and business, while the nonprofit organization will retain a stake in the company but relinquish its oversight responsibilities.

The nonprofit will continue to operate independently with its own leadership and focus on charitable initiatives in areas like health care, education, and science. According to OpenAI’s board, this approach aims to secure the capital needed for advancing artificial general intelligence (AGI) while also maintaining one of the most well-funded nonprofits in history. OpenAI’s competitors, such as Anthropic and Elon Musk’s xAI, are also structured as PBCs.

Rumors about OpenAI’s for-profit shift have circulated for months as the company seeks to attract investors and sustain its resource-intensive AI models. Bloomberg previously reported that CEO Sam Altman might receive a 7% equity stake as part of the transition, although Altman has denied this claim.

In its announcement, OpenAI’s board acknowledged the need for significant investment to remain competitive. “The scale of capital required to pursue our mission surpasses our earlier expectations. Investors are eager to support us but require conventional equity structures,” the board stated.

Under the new framework, the nonprofit will receive shares in the for-profit PBC at a valuation determined by independent financial advisors. However, OpenAI’s plans face potential legal challenges. Last month, Elon Musk filed a motion to prevent the transition, and Meta CEO Mark Zuckerberg called on California Attorney General Rob Bonta to block the move.