OpenAI announces plan to transform into a for-profit company

OpenAI has outlined plans to become a for-profit company. IN blog post published on FridayOpenAI’s management said it would replace the company’s existing structure with one that placed control in the hands of its for-profit arm.

In 2025, OpenAI plans to become a Public Benefit Corporation (PBC), i.e. a for-profit business that is meant to operate for the good of society. The division will “operate and control OpenAI’s operations and business,” while the nonprofit OpenAI will retain a stake in the business but lose its oversight role.

The nonprofit will operate separately, with its own leadership team and staff “to pursue charitable initiatives in sectors such as health care, education and science.” The board said this structure would allow OpenAI to “raise the necessary capital” to develop artificial general intelligence while creating “one of the best-resourced nonprofit organizations in history.” OpenAI competitors incl Anthropic AND Elon Musk’s xAIthey also act as PBCs.

Rumors of OpenAI turning into a for-profit company have been circulating for months as the company looks for ways to attract investors and raise money to keep its data-intensive artificial intelligence models running continuously. in September Bloomberg announced that CEO Sam Altman will receive an approximately 7 percent equity stake as part of OpenAI’s plans to become a for-profit company, something Altman reportedly denied it.

“The hundreds of billions of dollars that large companies are currently investing in AI development demonstrate what it really takes for OpenAI to continue its mission,” the board wrote. “Once again, we need to raise more capital than we imagined. Investors want to support us, but at this scale of capital they need conventional equity capital and less structural adaptation to individual needs.”

Under the structure outlined by OpenAI’s board, the nonprofit will receive shares in PBC “at a fair valuation determined by independent financial advisors.” Concerns about keeping the nonprofit OpenAI’s board under control increased last year when its members ousted Altman but later reinstated him.