Open AI Steps Back from the For-Profit Cliff

Open AI announced today that it would no longer seek to restructure itself as a for-profit company after discussions with civic leaders. This is a response to internal threats from employees who petitioned the Attorneys General of California and Delaware to halt Open AI’s corporate transition.

“OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit,” Open AI CEO Sam Altman writes in a letter to employees. “That will not change.”

It was going to change. Indeed, almost everything about Open AI seems to change regularly.

In the wake of a series of on-again, off-again lawsuits from Elon Musk, Open AI announced in late 2024 that it would restructure as a public benefit company (PBC), a for-profit corporation designed to do good for the public and social good. Since the, Microsoft and Open AI ended the Azure exclusivity clause in their partnership, Open AI fended off an unsolicited buyout offer from Musk and a cabal of investors, and Open AI announced a leadership update that would give Altman more time to focus on the shift to a for-profit company.

Not anymore.

“OpenAI is not a normal company and never will be,” Altman writes in the letter in the understatement of the century. “Our mission is to ensure that artificial general intelligence (AGI) benefits all of humanity … We are committed to this path of democratic AI … We believe this is the best path forward—AGI should enable all of humanity to benefit each other. We realize some people have very different opinions.”

Altman says that it is time for the company to evolve its structure yet again. But instead of replacing its non-profit parent company with a for-profit PBC, Open AI will instead make its parent “the largest and most effective non-profit in history,” one dedicated to delivering beneficial AGI. As to the “why” of this change, he says that Open AI heard from “civic leaders” and was “having discussions with the offices of the Attorneys General of California and Delaware.” And because of that input, Open AI will stick with a non-profit parent company while the for-profit company will transition to become a PBC with the same mission. The non-profit will be the largest shareholder of the PBC.

“We are moving to a normal capital structure where everyone has stock,” he adds. “This is not a sale, but a change of structure to something simpler.”