OpenAI says it has new for-profit business structure, adjusts partnership with Microsoft

SAN FRANCISCO (AP) — OpenAI said Tuesday it has reorganized its ownership structure and converted its business into a public benefit corporation, paving the way for the ChatGPT maker to more easily profit off its artificial intelligence technology even as it remains technically under the control of a nonprofit.

The company also said it has signed a new agreement with its longtime backer Microsoft that gives the software giant a roughly 27% stake in OpenAI’s new for-profit corporation but changes some of the details of their close partnership.

For more than a year, OpenAI’s proposed changes to its corporate structure have drawn the scrutiny of regulators, competitors and advocates concerned about the societal impacts of AI.

The attorneys general of Delaware, where OpenAI is incorporated, and California, where it is headquartered, had both said they’re investigating the proposed changes. Neither office immediately responded to a request for comment Tuesday.

OpenAI said it completed its restructuring “after nearly a year of engaging in constructive dialogue” with the offices in both states.

“OpenAI has completed its recapitalization, simplifying its corporate structure,” said a blog post Tuesday from Bret Taylor, the chair of OpenAI’s board of directors. “The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.”

AGI stands for artificial general intelligence, which OpenAI defines as “highly autonomous systems that outperform humans at most economically valuable work.” OpenAI was founded as a nonprofit in 2015 with a mission to safely build AGI for humanity’s benefit.

OpenAI had previously said its own board will decide when AGI is reached, effectively ending its Microsoft partnership. But it now says that “once AGI is declared by OpenAI, that declaration will now be verified by an independent expert panel,” and that Microsoft’s rights to OpenAI’s confidential research methods “will remain until either the expert panel verifies AGI or through 2030, whichever is first.” Microsoft will also retain some commercial rights to OpenAI products “post-AGI.”

Microsoft put out the same announcement about the revised partnership Tuesday but declined further comment.

Going forward, the nonprofit will be called the OpenAI Foundation and Taylor said it would grant out $25 billion toward health and curing diseases and protecting against the cybersecurity risks of AI. He did not say over what time period those funds would be dispersed.

Robert Weissman, co-president of the nonprofit Public Citizen, said this arrangement does not guarantee the nonprofit independence, likening it to a corporate foundation that will serve the interests of the for profit.

Even as the nonprofit’s board may technically remain in control, Weissman said that control “is illusory because there is no evidence of the nonprofit ever imposing its values on the for profit.”