OpenAI abandons profit motive: a significant shift

ChatGPT announced in a statement that its non-profit arm will retain control over OpenAI, while the for-profit division is being restructured into a public benefit corporation. This move addresses criticism from figures including billionaire and co-founder Elon Musk, who has long been engaged in a legal battle against OpenAI and its other founders, Sam Altman and Greg Brockman.

Musk argues that the company broke its promise by planning to transition from a non-profit to a for-profit entity. A California judge ruled last Friday that Musk can proceed with his fraud claims. OpenAI stated that it adjusted its plans after 'listening to societal leaders and engaging in constructive dialogue with the offices of the attorneys general of Delaware and California.'

Tech editor Joe van Burik explains that OpenAI will convert its for-profit division into a public benefit corporation (PBC). 'Companies use this structure to appear as if they serve the public interest while still making profits. The advantage of a PBC is that profit distributions to investors are less restricted, which OpenAI needs to attract further investments and stay ahead in the AI race.'

However, Van Burik acknowledges a significant shift: 'This decision came after discussions with the attorneys general of Delaware and California—coincidentally the same individuals in contact with Elon Musk, who filed a lawsuit against OpenAI’s transformation.' Meta also opposed the plans, leading OpenAI’s chairman Bret Taylor to announce the revised approach.