OpenAI said Monday it will retain its nonprofit governance structure even as it restructures to raise new capital, scaling back earlier plans to fully convert into a public benefit corporation following regulatory scrutiny, legal threats, and civic backlash.
The company, which is valued at $300 billion and backed by Microsoft, announced in a blog post that its nonprofit parent will continue to control its for-profit subsidiary. "We 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," OpenAI said.
The shift follows criticism over a proposed restructuring plan announced in December that would have separated the nonprofit from the company's commercial arm. The original plan would have allowed for more aggressive fundraising, including a pending $40 billion investment round led by SoftBank, but raised questions about OpenAI's alignment with its founding mission to ensure AI benefits humanity.
Chairman Bret Taylor told reporters Monday that OpenAI will now convert its limited liability company into a public benefit corporation, but with the nonprofit retaining governance authority and a majority equity stake. "With the structure we're contemplating, the not-for-profit will remain in control of OpenAI," Taylor said.
The restructuring will allow employees, the nonprofit, and external investors to hold equity in the PBC, with a separate board to be appointed - though all directors will be chosen by the nonprofit parent. "The fiduciary duty of the not-for-profit board is exclusively to that mission," Taylor said.
CEO Sam Altman, reinstated last year after a brief ouster by the board, described the revised structure as a compromise that keeps OpenAI's governance "extremely close" to its current form. Altman said he was "very happy that the nonprofit and the PBC will have the same mission," adding that the arrangement "works well enough for investors that they're happy to continue to fund us."
OpenAI's plans to restructure have drawn scrutiny from multiple stakeholders, including a group of ex-employees, Nobel laureates, and nonprofit advocates, who argued the original plan would "subvert OpenAI's charitable purpose." Page Hedley, a former policy advisor and organizer of the group Not For Private Gain, said in a statement that while the new direction is welcome, "crucial questions remain," including whether OpenAI's profit motive may still override its stated mission.
The decision also comes amid a lawsuit filed by Elon Musk, a co-founder of OpenAI, who alleges the company deviated from its original nonprofit mandate by commercializing AI research and entering exclusive partnerships. In February, a Musk-led investor group reportedly offered to buy OpenAI for $97.4 billion, a bid that was rejected.
OpenAI's pursuit of artificial general intelligence - AI that can surpass human cognitive ability - continues to demand large-scale capital. Altman said in a letter to employees that the company may eventually require trillions of dollars in compute resources to fulfill its mission. "When we started OpenAI, we did not have a detailed sense for how we were going to accomplish our mission," he wrote.
