OpenAI, the artificial intelligence pioneer behind ChatGPT, announced on Monday that its nonprofit arm will retain control of its for-profit division, abandoning plans to fully transition to a for-profit model.
The decision, detailed in a blog post by Board Chairman Bret Taylor, follows intense scrutiny from civic leaders, regulators, and critics, including billionaire co-founder Elon Musk and Meta.
“We made the decision for the nonprofit to retain control of OpenAI 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 company stated.
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As OpenAI restructures its for-profit arm into a public benefit corporation (PBC), valued at $300 billion after a record $40 billion funding round, the move balances its mission to advance AI for humanity with the capital demands of a competitive industry.
The move marks a significant reversal from its September 2024 plan to shed nonprofit control and adopt a traditional for-profit structure, driven by the need for substantial capital to train advanced AI models. CEO Sam Altman, addressing employees and investors, explained the original rationale.
“Instead of our current complex capped-profit structure—which made sense when it looked like there might be one dominant AGI effort but doesn’t in a world of many great AGI companies—we are moving to a normal capital structure where everyone has stock,” he said.
The shift aimed to simplify governance and attract investors, as training models like o3 and o4-mini, launched in April 2025, can cost billions.
However, the path to full for-profit status proved fraught with legal and public obstacles. “The TLDR is that with the structure we’re contemplating, the not-for-profit will remain in control of OpenAI,” Taylor stated in the blog post, indicating that the nonprofit will remain a significant shareholder in the PBC, overseeing its operations to ensure alignment with its mission of ensuring artificial general intelligence (AGI) benefits all of humanity.
Altman, in a virtual press briefing, expressed gratitude for the feedback that shaped the decision.
“We’re very grateful to all the people that have constructively engaged with us, talking about different ways we could do this, and I’m very happy that we’ve made the decision for the nonprofit to stay in control,” he said.
The restructuring into a PBC allows OpenAI’s for-profit arm to prioritize societal benefits alongside shareholder value, maintaining nonprofit oversight while enabling access to capital markets. This hybrid model addresses investor requirements from the March 2025 funding round, which included a clause allowing refunds if the for-profit transition wasn’t completed within two years.
“OpenAI’s transition will satisfy the requirements accompanying the investments made by SoftBank and other investors,” a person familiar with the matter told BI, ensuring the $40 billion round, led by SoftBank, Thrive Capital, and others, remains secure.
Origins in Public Interest, Driven by Capital Needs
Founded in 2015 as a nonprofit by Sam Altman, Elon Musk, Greg Brockman, and others, OpenAI aimed to develop AI safely and ethically, as outlined on its website. In 2019, it adopted a “capped-profit” model, creating a for-profit subsidiary to fund research while retaining nonprofit control, a structure Altman later described as complex in a world with multiple AGI competitors.
The 2023 leadership crisis, when the nonprofit board ousted Altman over communication breakdowns, only to reinstate him after employee and investor pressure, exposed governance vulnerabilities. The episode, resolved in five days, highlighted the tension between mission and commercial ambitions, setting the stage for the 2024 for-profit push.
The September 2024 announcement to transition fully to for-profit status sparked immediate backlash. Converting assets, determining equity for Altman and investors, redefining governance, and amending OpenAI’s Delaware incorporation required navigating a legal minefield. Public criticism was fierce, led by Musk, who left OpenAI in 2018 and founded rival xAI in 2023. Musk filed multiple lawsuits in 2024, alleging OpenAI breached its nonprofit mission by prioritizing profit, aiming to halt the restructuring.
Meta, a competitor via its AI division, also opposed the move. In a December 2024 letter to the California Attorney General, Meta accused OpenAI of “taking advantage” of its nonprofit status to raise funds, urging regulators to block the transition. The California and Delaware Attorney General offices engaged with OpenAI, with their input proving pivotal.
OpenAI cited “Engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California” as a key driver of the nonprofit retention decision.
The AI industry’s capital-intensive nature drove OpenAI’s initial for-profit push. Training advanced models like o3, which supports multimodal tasks like image analysis, demands billions, as Altman noted in 2024. Competitors like Anthropic, backed by Amazon’s $4 billion, and Google’s DeepMind, funded internally, have raised significant sums, while xAI leverages Musk’s resources.
However, OpenAI’s leadership is underscored by the $300 billion valuation, with ChatGPT boasting 200 million weekly active users and enterprise solutions like ChatGPT Enterprise gaining traction.