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Concerns Arise Over OpenAI’s Shift Towards For-Profit Status in California
A coalition of organizations, including nonprofits such as LatinoProsperity and labor unions like the California Teamsters, have formally requested California Attorney General Rob Bonta to intervene against OpenAI’s transition into a for-profit entity. This move comes in response to OpenAI’s recent announcement regarding its plans to transform into a public-benefit corporation by 2024, with the condition that it must complete this transition within two years to avoid the substantial risk of its capital turning into debt.
The primary concerns voiced by these groups include allegations that OpenAI has “failed to protect its charitable assets” and is compromising its initial mission of promoting safe artificial intelligence. Originally established as a nonprofit research organization focused on AI, OpenAI shifted to a for-profit model overseen by a nonprofit in 2019.
While this hybrid structure operates legally under California law, the petition argues that OpenAI’s current trajectory appears to favor financial gains over its original objectives. The groups contend that the intention behind the structural changes is to facilitate profits and control for a select group of corporate investors and executives associated with OpenAI.
Engadget has reached out to Attorney General Bonta to gather insights regarding the petition and will provide updates as more information becomes available.
In response to the concerns raised, OpenAI emphasized its commitment to reinforce its nonprofit foundation to better fulfill its mission long-term. “Our Board has been very clear that we intend to strengthen the non-profit so that it can deliver on its mission for the long term. We’re not selling it; we’re doubling down on its work,” OpenAI noted to Engadget. The organization also expressed eagerness to collaborate with community leaders to explore how it can assist in achieving their objectives, as highlighted recently by the establishment of an advisory Commission.
OpenAI’s rationale for the profit-oriented shift centers on the need for additional funding. Currently, the organization faces limitations on the returns it can offer to investors, which would be mitigated under a for-profit model. This change would also free OpenAI from the constraints of a nonprofit board that prioritizes the implications of its innovations, potentially over their market viability.
The governance challenges faced by OpenAI are evident, as illustrated by events such as the temporary ousting of Sam Altman in 2023, before he was reinstated with a board composition more supportive of OpenAI’s profit-driven aspirations. The petitioning organizations argue that such governance shifts warrant the intervention of the Attorney General to safeguard public interests.
This petition aligns with various other efforts to halt OpenAI’s pivot towards a for-profit structure, including a letter from Meta urging the Attorney General to take a stance against the potential legal ramifications of this conversion and Elon Musk’s previous attempts to acquire the company.
Update 8:24PM ET: Added comment from OpenAI.
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