The Battle Over OpenAI's Nonprofit Status

Controversy Surrounds Restructuring Plans

OpenAI, the pioneering AI lab behind ChatGPT, faces intense scrutiny over its plans to transition into a for-profit public benefit corporation. Founded as a nonprofit in 2015, the company's restructuring has sparked objections from tech giants like Elon Musk, Meta, and consumer advocate Robert Weissman.

Weissman highlights OpenAI's prior acceptance of donations as a nonprofit, stating, "They didn't have to pretend that they were going to be able to return investment to people. They were asking them to do it on a charitable basis."

Legal Considerations and Precedents

Weissman explains the legal complexities involved in the conversion. "This is a very unusual thing, and exactly the pathway that OpenAI has taken, maybe no entity has ever done," he says.

Drawing parallels to nonprofit insurance companies transitioning to for-profit status, Weissman emphasizes the need for an equitable exchange.

OpenAI's Proposed Transition

OpenAI's initial plan involved spinning off its for-profit affiliate with the affiliate paying the nonprofit to cover the value of its assets. However, this approach has raised concerns about potential irregularities.

Advocacy for an Independent Foundation

Weissman's letter to California's attorney general urges OpenAI to pay at least $30 billion and establish an independent charitable foundation to maintain public interest in AI development.

"We said, look, at least they're owed the control premium, which on the low end is 20% of the value of an acquired company in most transactions," explains Weissman.

Impact on OpenAI's Mission

Critics argue that OpenAI's focus on profits has jeopardized its original mission to prioritize humanity over commercial interests.

Weissman observes, "They've abandoned that. They say they're converting to a public benefit corporation, which would have the ability to consider both profit and nonprofit interests." However, he notes OpenAI's recent aggressive rollout of technologies despite potential safety concerns.

Role of an Independent Foundation

Weissman believes an independent charitable foundation could play a crucial role in promoting research, safety, access, and education in AI. "It could support research and innovation designed to ensure safety," he says.

"It could pay more attention to safety on the one hand, and access to new technologies on the other," adds Weissman.