OpenAI focuses on its nonprofit control amid legal clash with Elon Musk

OpenAI has announced a significant pivot, walking back previous plans to evolve into a traditional for-profit entity, according to a May 5 statement. Instead, the organization will maintain its nonprofit roots and shift its for-profit unit into a Public Benefit Corporation (PBC), reinforcing its commitment to public interest in developing artificial general intelligence (AGI). According to the statement, the PBC model allows OpenAI to generate revenue, while the nonprofit parent retains control and holds a substantial equity position in the new structure. The firm noted that this approach is now common among advanced AI labs that must raise funding while staying focused on safety and long-term impact. OpenAI CEO Sam Altman confirmed that the nonprofit will remain central to the organization’s decision-making. He noted that the revised structure follows consultation with civic leaders and regulatory officials, including the attorneys general of California and Delaware. Altman explained that keeping nonprofit control will give OpenAI the resources it needs to scale responsibly. He also said the company wants its nonprofit arm to become one of the most effective in history, with a mission to ensure AGI benefits everyone. He added: “Instead of our current complex capped-profit structure—which made sense when it looked like there might be one dominant AGI effort but doesn’t in a world of many great AGI companies—we are moving to a normal capital structure where everyone has stock. This is not a sale, but a change of structure to something simpler.” OpenAI’s legal battle with Musk OpenAI’s reversal comes as legal tensions with Elon Musk, one of its co-founders, intensify. The Tesla CEO had accused the company of drifting from its founding mission and filed a lawsuit earlier this year to halt its shift toward profit-driven goals. Notably, Musk had also made a $97 billion offer to buy OpenAI’s controlling nonprofit arm, which was not accepted. In response to OpenAI’s announcement, Musk’s legal team reportedly dismissed the move as cosmetic. The lawyers argued that the updated structure allows private parties, including Sam Altman and Microsoft, to benefit from assets originally intended for the public good. Meanwhile, OpenAI also recently countersued Musk, alleging he attempted to sabotage the organization through a fake takeover offer and a coordinated campaign to damage its reputation. Source: https://cryptoslate.com/openai-focuses-on-its-nonprofit-control-amidst-legal-clash-with-elon-musk/