OpenAI is preparing a major restructuring that would transform the artificial intelligence company from its current nonprofit-governed model into a for-profit public-benefit corporation, according to reports from Reuters and Bloomberg. This significant shift comes after more than four years of operating under what CEO Sam Altman previously described as an “unusual” corporate structure.
The restructuring would fundamentally change OpenAI’s governance, removing control from its nonprofit board and potentially granting Altman his first-ever equity stake in the company. Bloomberg reported that Altman is in discussions to receive a 7% equity stake, which at OpenAI’s reported $150 billion valuation would be worth approximately $10.5 billion. However, during an all-hands meeting on Thursday, Altman denied plans for a “giant equity stake,” according to CNBC.
The timing of these reports is notable, coming just hours after the sudden departure of Chief Technology Officer Mira Murati, which triggered widespread speculation about OpenAI’s future direction. The company was originally established as a nonprofit in 2015, but created a “capped profit” subsidiary called OpenAI LP in 2019 to accept investment, including more than $13 billion from Microsoft.
According to Anat Alon-Beck, a corporate law researcher at Case Western Reserve University, the new structure could give Altman “more power to shareholders over decision-making,” especially if he becomes a controlling shareholder. Under a public-benefit corporation model, shareholders would elect board members at annual meetings, and those directors would then determine company policy and hire officers.
The restructuring would align OpenAI with competitors like Anthropic and Elon Musk’s xAI, both of which operate as public-benefit corporations that balance profit-making with mission-driven goals. An OpenAI spokesperson emphasized that the nonprofit entity “will continue to exist” and remains core to the company’s mission.
Critical changes include the removal of profit caps that currently limit returns to investors, and the loss of nonprofit tax benefits. Delaware public-benefit corporations must file biennial reports demonstrating progress toward social impact goals while paying standard corporate taxes. Professor Eric Chaffee from Case Western Reserve University noted that “the emphasis will now be on making a profit,” and the restructuring appears designed to facilitate easier investor exits and larger returns. The move would also make OpenAI more attractive for additional investment as it reportedly raises funds at its massive $150 billion valuation.
Key Quotes
AI is an unusual technology.
Sam Altman made this statement over a year ago when defending OpenAI’s atypical corporate structure. The quote now carries ironic weight as the company moves toward a more conventional for-profit model, suggesting the unusual structure may no longer be sustainable.
The emphasis will now be on making a profit, and any tax benefits that it enjoyed as a result of its nonprofit status will go away.
Eric Chaffee, a professor of business law at Case Western Reserve University, explained the fundamental shift in OpenAI’s priorities and financial obligations. This highlights how the restructuring represents not just a legal change but a philosophical transformation in the company’s mission.
More power to shareholders over decision-making, especially if they’re a controlling shareholder, which Altman could become.
Anat Alon-Beck, a corporate law researcher, explained how the new structure could consolidate power in Sam Altman’s hands. This is particularly significant given the board’s attempt to remove Altman in November 2023, suggesting the restructuring may prevent similar governance challenges in the future.
Our Take
OpenAI’s restructuring reveals the fundamental tension between AI safety idealism and commercial reality. The company’s original nonprofit structure was designed to ensure AGI development prioritized humanity over profits, but the massive capital requirements of frontier AI research have made this model untenable. Altman’s potential $10.5 billion equity stake and increased control represent a dramatic reversal from the board’s attempt to remove him in 2023, suggesting he’s emerged from that crisis with significantly more power. The timing—coinciding with Mira Murati’s departure—raises questions about internal disagreements over this direction. This shift may accelerate the AI arms race, as removing profit caps could incentivize faster deployment over cautious safety testing. The public-benefit corporation structure offers some mission protection, but whether it can meaningfully constrain profit-seeking behavior remains uncertain. This moment may be remembered as when AI development definitively chose commercial viability over nonprofit idealism.
Why This Matters
This restructuring represents a watershed moment for the AI industry, signaling a shift from idealistic nonprofit governance toward traditional profit-driven corporate structures. OpenAI’s transformation could set a precedent for how AI companies balance safety concerns with commercial pressures, especially as the technology becomes increasingly powerful and economically valuable.
The move has significant implications for AI safety and ethics. OpenAI was founded with a nonprofit structure specifically to prioritize humanity’s interests over profit. Removing the nonprofit board’s oversight and profit caps raises questions about whether commercial incentives might compromise safety considerations as the company races to develop artificial general intelligence (AGI).
For the broader tech ecosystem, this restructuring demonstrates the enormous capital requirements of frontier AI development. The $150 billion valuation and need to attract further investment underscore how AI has become a capital-intensive industry requiring traditional corporate structures to sustain growth. This could influence how future AI startups organize themselves and whether the nonprofit model remains viable for cutting-edge AI research.
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Source: https://www.businessinsider.com/sam-altman-openai-restructure-richer-control-2024-9