Currently OpenAI's reorganization is going to place its commercial division in charge.
12/28/20241 min read
The OpenAI presently intends to open its next formation, with the aim of making the company for profit oriented. The OpenAI board stated that it will remove the current governance structure and vest the power into the commercial subsidiary.
By 2025, OpenAI intends to transform the organization into the Public Benefit Corporation (PCB), a for-profit marketplace designed for the public's advantage. This division will be accountable for "operating and managing the business of OpenAI" with OpenAI, the non-profit losing operational control even if it remains a shareholder.
Non-profit will be run autonomously and will have its own leadership and workforce "to engage in charitable activities within fields including healthcare, education and science." OpenAI's board claimed it enables the company to "raise the necessary capital" to advance toward solving artificial general intelligence while generating "one of the best resourced non-profits in history." Other OpenAI competitors such as Anthropic and Elon Musk's xAI are also PBCs, or Perception and Control business.
There has been speculation regarding OpenAI transformation into a for-profit venture for months and as the company seeks to attract more investors and more importantly capital to sustain its data-hungry large AI models. In September Bloomberg described OpenAI's plans to become a for-profit in which CEO Sam Altman would have equity stake of roughly 7 percent something which Altman has since dismissed.
"The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursing the mission," the board wrote. We again have to come up with more funds that we never ever hoped for. People would like to invest in us but at this scale of capital require normal equity and less of structural customization.
According to the plan set out by OpenAI's board, the non-profit acquire shares in the PCB at a reasonable price to be assessed by financial consultants". Apprehension about managing OpenAI's non-profit board escalated last year when its members fired but later recalled Altman back.
Still, the company may have a fight on its hands even with these plans to switch to a for-profit. In the previous month, Elon Musk filed a motion to prevent OpenAI from changing to a for-profit company, and Meta's head, Mark Zuckerberg urged against the change by contacting the California Attorney General Rob Bonta.


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