What just happened? OpenAI and Sam Altman have decided that becoming a for-profit entity is more trouble than it's worth. The CEO has announced that the nonprofit arm will continue to control the company as it becomes a public benefit corporation.
OpenAI made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware, writes Altman.
"With the structure we're contemplating, the not-for-profit will remain in control of OpenAI," Bret Taylor, OpenAI's board chairman, told reporters. "We will be converting the limited liability company, that is a subsidiary of that nonprofit, to a public benefit corporation. By doing so, it will change the equity structure of that company so that employees, investors and the not-for-profit can own equity in that PBC."
Taylor added that the non-profit would have a majority stake in the company.
OpenAI's plans to spin out its for-profit subsidiary had led to a lawsuit from Elon Musk, who sued the company over claims it was abandoning its mission to benefit humanity. Altman denied that the decision was in any way related to Musk's actions.
4 facts about our structure:
– OpenAI (@OpenAI) May 5, 2025
-OpenAI will continue to be controlled by the current nonprofit
-Our existing for-profit will become a Public Benefit Corporation
-Nonprofit will control & be a significant owner of the PBC
-Nonprofit & PBC will continue to have the same mission
OpenAI was founded as a nonprofit in 2015. It created OpenAI LP, a capped-profit limited-partnership subsidiary, in 2019. The subsidiary limits the returns on profits to outside investors and partners, such as Microsoft.
A public benefit corporation, which the for-profit portion of the company will transition to, is still a profit-focused entity but one that legally commits to pursuing a specific public benefit or set of social/environmental purposes in addition to generating profits for shareholders.
In a letter to employees, Altman wrote that OpenAI's mission is to ensure that artificial general intelligence (AGI) – artificial intelligence with human-like intelligence – benefits all of humanity.
Altman recently said that almost one billion people around the world were now using ChatGPT for a variety of reasons. The changing corporate structure is because the company "currently cannot supply nearly as much AI as the world wants and we have to put usage limits on our systems and run them slowly."
Altman adds that making OpenAI's services available to all of humanity currently requires hundreds of billions of dollars and may eventually require trillions of dollars.
Last month, a number of former OpenAI employees, prominent AI scientists, law experts, and others signed an open letter urging the attorneys general for California and Delaware to stop OpenAI from becoming a for-profit entity.
It was recently reported that Microsoft boss Satya Nadella's once-close relationship with Altman was becoming frosty, and Microsoft could block OpenAI's for-profit restructuring.
OpenAI abandons for-profit shift, keeps nonprofit control with new public benefit corporation
