OpenAI has announced a significant reversal in its restructuring plans, stating that its nonprofit arm will retain control over the company’s operations even as it transitions its for-profit division to a public benefit corporation (PBC). This announcement represents a major shift from the company’s earlier intentions to convert more fully to a for-profit structure.
In a statement posted on the company’s blog, OpenAI Board Chairman Bret Taylor explained, “OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit.” According to the company, the decision came “after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California.”
The AI company, known for developing ChatGPT, had previously sought to restructure as a for-profit entity, arguing that the move was necessary to raise the substantial capital required for its growth and operations. The shift had faced significant opposition from various quarters, including OpenAI co-founder Elon Musk, who filed a lawsuit against the company alleging that it was abandoning its original nonprofit mission.
Current structure and proposed changes
Under the current setup, OpenAI operates as a “capped-profit” company with a nonprofit parent organization that has a controlling stake in its corporate arm. With the new plan, the for-profit LLC will transition to a public benefit corporation with the same mission, while the nonprofit will remain in control and become “a large shareholder of the PBC.”
CEO Sam Altman, in a letter to staff published on the company’s blog, explained that OpenAI is moving away from its “complex capped-profit structure” to “a normal capital structure where everyone has stock.” Altman argued that the previous structure “made sense when it looked like there might be one dominant AGI effort but doesn’t in a world of many great AGI companies.”
Altman also stated that the company may eventually require “trillions of dollars” to fulfill its goal of making its services “broadly available to all of humanity.”
Opposition and legal challenges
Despite OpenAI’s revised plans, Musk’s attorney, Marc Toberoff, remains unsatisfied. In a statement, Toberoff called the announcement “a transparent dodge that fails to address the core issues,” arguing that “charitable assets have been and still will be transferred for the benefit of private persons.”
Prior to this announcement, OpenAI had faced increasing pressure from multiple directions. A group of ex-OpenAI employees filed amicus briefs supporting Musk’s lawsuit, while various nonprofits and labor groups petitioned California Attorney General Rob Bonta to intervene. Additionally, several Nobel laureates, law professors, and civil society organizations had sent letters to both California and Delaware attorneys general requesting that they halt the restructuring.
The federal judge overseeing Musk’s lawsuit had denied his request for a preliminary injunction to stop OpenAI’s conversion but allowed the case to proceed to a jury trial scheduled for spring 2026.
OpenAI’s new direction appears to be an attempt to address these various concerns while still evolving its corporate structure to support its ambitious goals. The company stated it looks forward to “continuing these important conversations” with the attorneys general of California and Delaware to ensure it “can continue to effectively pursue its mission.”
Sources: OpenAI, TechCrunch, Bloomberg