OpenAI announces plan to transform into a for-profit company

OpenAI has unveiled plans to transform into a for-profit company. In a blog post, OpenAI's board of directors announced that it will replace the company's existing structure with one that places control in the hands of a purpose-built for-profit division.

By 2025, OpenAI plans to become a Public Benefit Corporation (PBC), a for-profit company dedicated to the good of society. This entity will “manage and oversee the operations and operations of OpenAI,” while the non-profit OpenAI entity will retain a stake in the operations but will lose its supervisory role.

The nonprofit will operate separately with its own management team and staff “to pursue philanthropic initiatives in sectors such as healthcare, education, and science.” The board said the structure will allow OpenAI to “raise the capital needed” to develop general artificial intelligence while creating “one of the best-resourced nonprofits in history.” OpenAI’s competitors, including Anthropic and Elon Musk’s xAI, also operate as public benefit corporations.

Rumors of OpenAI becoming a for-profit company have been circulating for months as the company looks for ways to attract investors and raise money to maintain its energy- and data-guzzling language models. In September, Bloomberg reported that CEO Sam Altman was set to receive about a 7% equity stake as part of OpenAI's plans to become a for-profit company, a claim Altman has denied.

“The hundreds of billions of dollars that large companies are now investing in AI development demonstrate what it will truly take for OpenAI to continue to fulfill its mission,” the board wrote. “We need to raise more capital again than we initially envisioned. Investors want to support us, but with this level of capital, they need traditional equity and less structural obscurity.”

The transformation could face some obstacles. Elon Musk and Mark Zuckerberg oppose it and have already taken steps to halt the company's transformation.