OpenAI Transits To Profit-Making Business

OpenAI, the artificial intelligence powerhouse, is making an effort to transit from non-profit origins to a more conventional for-profit business model. It is planning to transit after it recently secured $6.6 billion funding making its current business value stands at $157 billion.

The company has entered early discussions with regulators in California and Delaware as it seeks to navigate this transition.

According to a Bloomberg report, sources familiar with the matter reveal that OpenAI is in preliminary conversations with the California attorney general’s office, discussing the complexities involved in changing its corporate structure.

A central focus of these discussions will be how OpenAI values its highly lucrative intellectual property, including its proprietary ChatGPT technology. Delaware’s attorney general is also engaged, requesting detailed plans on the potential restructuring, according to a formal letter sent to OpenAI.

Originally established in 2015 as a nonprofit organisation with a mission to de – velop artificial intelligence for the greater good, OpenAI’s shift toward a for-profit model raises questions about maintaining its commitment to societal benefit.

However, OpenAI’s nonprofit board chairman, Bret Taylor, assured that the nonprofit would continue to play a significant role in any restructured entity.

“Any potential restructuring would ensure the nonprofit continues to exist and thrive, receiving full value for its current stake in the for-profit,” Taylor stated.

The move toward a for-profit model has roots in OpenAI’s 2019 decision to establish a capped for-profit subsidiary to offset the high costs associated with AI development.

Tensions have historically existed between OpenAI’s nonprofit board and management, particularly concerning the balance between AI safety and commercial imperatives.

This tension became public in 2023 when CEO Sam Altman was briefly ousted, only to be reinstated following a dispute over the company’s commercialisation strategy.