Microsoft Corp.-backed (NASDAQ:MSFT) OpenAI has outlined its plans to transition its for-profit entity into a Delaware Public Benefit Corporation (PBC).
What Happened: Making the announcement, OpenAI said that it needs to evolve to align with its mission of ensuring artificial general intelligence (AGI) that benefits all humanity.
The company, currently structured with a nonprofit controlling a for-profit, intends to balance shareholder and stakeholder interests while maintaining its public benefit mission.
OpenAI's existing nonprofit will receive shares in the new PBC, valued by independent financial advisors.
OpenAI's blog post emphasized the need to evolve beyond a lab and startup to become an enduring company as the world builds new infrastructure for the 21st-century economy. The transition is expected to help OpenAI raise the necessary capital with conventional terms.
"As we enter 2025, we will have to become more than a lab and a startup — we have to become an enduring company," said OpenAI.
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"The world is moving to build out a new infrastructure of energy, land use, chips, datacenters, data, AI models, and AI systems for the 21st century economy. We seek to evolve in order to take the next step in our mission, helping to build the AGI economy and ensuring it benefits humanity."
However, the plan faces opposition. Billionaire and OpenAI co-founder Elon Musk has filed for an injunction to halt the transition, accusing OpenAI of straying from its original mission.
Additionally, Meta Platforms Inc. (NASDAQ:META) has also expressed concerns, arguing that the shift could have significant implications for Silicon Valley.
OpenAI's current structure led to the ousting of CEO Sam Altman last November, causing investor dissatisfaction, particularly from Microsoft. The company continues to face challenges, including talent outflow and concerns about prioritizing commercial products over safety.
Why It Matters: The transition of OpenAI into a for-profit entity has sparked significant controversy, particularly from Musk, who has taken legal action to block the move. Musk, a co-founder of OpenAI, has been vocal about his concerns, arguing that the transition could divert the company's focus from its original mission.
Adding to the complexity, Mark Zuckerberg-led Meta has sided with Musk, highlighting the potential misuse of assets developed under OpenAI's nonprofit status. This alliance is notable given Musk's recent public disagreements with Meta's Mark Zuckerberg over AI advancements.
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