OpenAI Abandons Plans To Become a For-Profit Company
What OpenAI’s restructuring means for the future of the business
Welcome to another edition of AI 101, where every Wednesday we bring you the biggest AI update of the week.
This Week’s Update: OpenAI To Allow Nonprofit To Maintain Control over Its Core Business
On May 5th, OpenAI announced that it is abandoning plans to convert the business into a for-profit company.
OpenAI is currently structured as a capped-profit limited liability corporation (LLC) that is controlled by a nonprofit. In September 2024, OpenAI revealed its intentions to place its AI business under the control of a for-profit public-benefit corporation (PBC), drastically limiting the role of the nonprofit. The planned restructuring would have made OpenAI more attractive to investors by altering its profit motive and removing the previous cap on returns.
Under the new plan, OpenAI still intends to transition the capped-profit LLC into a public-benefit corporation. However, this new corporation will be controlled and overseen by the nonprofit.
Why This Is Important
OpenAI CEO Sam Altman stated that the decision was made after discussions with the attorneys general of California and Delaware, who would have to sign off on the conversion. The reality is that the changes to the restructuring plans are minimal. The LLC will still be converted into a PBC, a common structure shared by AI companies like xAI and Anthropic, which will help attract investors to the company.
While OpenAI’s new structure will allow the nonprofit to maintain oversight, how much control it will have is unclear. Altman stated in a letter to the employees that the nonprofit would “become a big shareholder in the PBC” but did not discuss how large of a stake it would hold.
Elon Musk is still suing the company for abandoning its founding mission to build artificial general intelligence that benefits all of humanity. Whether this restructuring will have any impact on OpenAI’s approach to safety remains uncertain.
Quick Hits:
World, a startup co-founded by Sam Altman, announced an expansion to the U.S. last Wednesday. To distinguish real people from AI bots online, World developed technology that scans irises to create a “World ID” that verifies your humanity.
On Monday, The New York Times reported that the latest wave of powerful reasoning models from OpenAI, Google, and DeepSeek have higher rates of hallucinations.
On Saturday, official White House social media accounts posted an AI-generated image of President Trump as the Pope.