OpenAI, the company behind ChatGPT, is reportedly in early discussions with regulators in California and Delaware to explore shifting to a for-profit business model. According to insiders familiar with the situation, OpenAI, now valued at $157 billion, has started talks with California Attorney General Rob Bonta’s office and his Delaware counterpart.
In September, it was reported that OpenAI was considering restructuring its core business to shift from a nonprofit model to a for-profit one. This change would mean that its nonprofit board would no longer oversee it. Moving to a for-profit structure is attractive to investors since it opens up more opportunities for growth and revenue.
However, a major point of discussion has been how to accurately value OpenAI’s intellectual property, especially its valuable large language model chatbot. California law might complicate the process, as it requires that the value of nonprofit assets be given to a charitable cause.
However, OpenAI’s main assets are its intellectual property. This shift could also raise questions about whether the company, founded in 2015, is staying true to its original mission of creating AI tools that are safe and beneficial for humanity.
Musk’s lawsuit and OpenAI’s future
In May. 2023, tech billionaire Elon Musk raised concerns about whether OpenAI’s switch to a for-profit model was even legal after it received a $50 million investment. Then, in Feb. 2024, Musk took legal action against OpenAI and its CEO, Sam Altman, claiming they breached a contract. However, he ended up dropping the lawsuit in June.
In a statement, Bret Taylor, OpenAI’s nonprofit board chairman, confirmed that the nonprofit will remain active within any new corporate structure the organization adopts. In 2019, OpenAI set up a capped for-profit subsidiary to help cover the substantial expenses of developing advanced AI models.
On Oct. 23, OpenAI long-time safety researcher Miles Brundage announced he was leaving the company. He shared plans to launch a new nonprofit or join an existing one focused on AI policy research and advocacy. Earlier in October, reports suggested that OpenAI might not reach profitability until 2029, even after hitting a projected $100 billion in revenue.
