It has been reported that AI giant OpenAI is in preliminary talks with regulators in California and Delaware to transition its corporate structure to a for-profit entity. The company, known for ChatGPT, currently has an estimated valuation of $157 billion. According to Bloomberg, OpenAI has engaged with California Attorney General Rob Bonta and relevant officials in Delaware.
As early as September 2023, Reuters reported that OpenAI was planning to restructure its core business into a for-profit company, no longer controlled by its non-profit board. However, a major challenge in the discussions was how to value OpenAI's intellectual property, with its most valuable asset being its high-profit language model chatbot. Under California law, the valuation of non-profit assets must be allocated to charitable causes, making the process potentially complex and time-consuming.
Despite this, a simplified for-profit structure is clearly more attractive to investors. This transition has also raised questions about whether OpenAI is still adhering to its original intention when it was founded in 2015, which was to develop safe and beneficial AI products for humanity. In May 2023, tech mogul Elon Musk questioned whether OpenAI's transition to a for-profit was legal, stating, "OpenAI was initially established as an open-source non-profit company to compete with Google, but now it has become a closed, profit-maximizing company, effectively controlled by Microsoft."
Musk sued OpenAI and its CEO Sam Altman in February 2024 for breach of contract but withdrew the lawsuit in June. OpenAI's non-profit board chairman, Bret Taylor, told Bloomberg that any potential restructuring would ensure the continued existence and development of the non-profit organization, and fully value its current stake in OpenAI's for-profit company, enhancing its ability to pursue its mission.
Additionally, the company created a limited for-profit subsidiary as early as 2019 to help fund the high costs of AI model development. However, subsequent turbulence, including the brief dismissal and rehiring of CEO Sam Altman, also intensified tensions within the non-profit board. On October 23, OpenAI's senior security researcher Miles Brundage announced his resignation, stating plans to establish a new non-profit organization or join an existing one, focusing on AI policy research and advocacy.
According to earlier forecasts, OpenAI is expected to face approximately $5 billion in losses in 2024 and is unlikely to become profitable before 2029.
Key Points:
🌟 OpenAI is negotiating with regulators to transition to a for-profit company.
💼 The transition faces challenges in IP valuation and legal issues, but a for-profit structure is more attractive to investors.
🔍 The transition raises questions about whether OpenAI's mission has changed, with past management turbulence also under scrutiny.