On Monday, May 5, OpenAI made an official announcement. Although they are still restructuring into a public benefit corporation, they will still allow the non-profit AI research arm to maintain control through a board of directors as it does now.
This decision can be seen as a victory for critics of OpenAI, including one of its co-founders, Elon Musk. Over time, Musk has frequently complained on social media that OpenAI has become too profit-focused, almost abandoning the original plan to build artificial intelligence systems with a top priority on operational safety for the public and users.
The changes announced on Monday are the latest step in a series of organizational upheavals at OpenAI, a startup that many consider to have the greatest influence in the world at present. The ChatGPT chatbot developed by OpenAI, launched at the end of 2022, has become a global phenomenon and has caused other tech companies to scramble to catch up. In just a few short years, the largest tech corporations in the world have spent billions of dollars on their own AI projects, with plans to invest hundreds of billions more from now until the end of the 2020s.
Mr. Musk, who is currently running his own AI company, has filed a lawsuit against OpenAI and Sam Altman regarding plans to change the corporate structure by abandoning the somewhat unusual previous structure, granting oversight to a non-profit organization over the for-profit company.
However, he is not the only one criticizing OpenAI's proposed changes. The Attorneys General of California, where OpenAI's headquarters is located, and Delaware, where OpenAI was legally established, have also stated that they are monitoring this restructuring process. California Attorney General Rob Bonta issued a statement that they are reviewing OpenAI's new plan.
And in recent weeks, many scholars from the legal field and experts in artificial intelligence, such as Professor Geoffrey Hinton, who won the Nobel Prize last year for his work in AI research and is known as the father of modern AI technology, have also expressed concerns about OpenAI's direction.
The debate about how OpenAI should be structured and what its top priorities should be has centered on a fundamental question about artificial intelligence: Should researchers rush to develop new and more powerful AI systems as quickly as possible? Or should the theoretical risks that AI may pose to humanity guide everything that researchers create?
OpenAI was originally founded by Altman, Musk, and several other researchers exactly 10 years ago to address the aforementioned concerns:
Sam Altman, CEO of OpenAI, created this AI organization along with several other prominent figures in AI research in Silicon Valley as a non-profit organization in late 2015. In 2018, after Musk left during a power struggle, Altman connected OpenAI with a for-profit corporate entity to raise the billions of dollars needed to build AI technologies and models.
However, since then, the board of the non-profit arm has maintained control through a structure that some view as a burden on the company's development. Last year, Altman and his company began working on plans to transfer control from the non-profit organization to OpenAI's investors to make it more appealing to them.
Immediately afterward, Musk sued OpenAI, Altman, and another co-founder, Greg Brockman, in federal court, alleging that they were prioritizing the company's commercial interests over community interests. This year, Musk and a group of investors also proposed buying the assets of the non-profit organization that controls OpenAI for more than $97 billion. The board of OpenAI rejected this offer.
Now, OpenAI seems to have reversed course, making a significant retreat from the plan to strip control from the non-profit organization. It is still unclear whether the new structure, which allows the non-profit to become the largest shareholder of OpenAI, will impact Musk's lawsuit.
A public benefit corporation is often described as an organization designed to create social benefits and value, allowing outside investors to invest similarly to how they would in other companies. "I am very pleased that we have made the decision for the non-profit to continue controlling," Altman said at a press conference. He added that this new change "sets us up for a clearer structure to do what a company like ours needs to do."
OpenAI stated that they are still negotiating the equity stake of the non-profit arm in the new company but indicated that the non-profit will have the power to choose members of the board of the new entity.
Jill R. Horwitz, a law professor at Northwestern University specializing in non-profit organizations, said, "I am pleased to see that the board seems to have worked with regulators, and the non-profit will continue to control. However, we still do not know what 'control' means."
Japanese investment firm SoftBank, led by billionaire Masayoshi Son, recently led a funding round of $40 billion into OpenAI, valuing the startup at $300 billion. If the restructuring is not completed by the end of the year, SoftBank will have the right to reduce their total capital contribution to $20 billion, according to a source familiar with the latest investment agreements between them.
Altman expressed confidence that funding would not be cut.
"We made the decision for the non-profit to continue controlling OpenAI after hearing from civil leaders and engaging in constructive dialogue with the Delaware Attorney General's office and the California Attorney General," said Bret Taylor, chairman of OpenAI, in a statement.
Marc Toberoff, the lawyer in charge of Mr. Musk's lawsuit against OpenAI, stated in a statement that the changes at OpenAI are "an act of evading transparency," as it does not address concerns about whether charitable assets are being used to benefit Mr. Altman and OpenAI's investors. "The mission when OpenAI was founded has been betrayed by them," Mr. Toberoff said.
According to The New York Times