OpenAI’s latest restructuring plan reverses their controversial December 2024 proposal while attempting to balance nonprofit governance with commercial viability. The new approach would transform OpenAI into a public benefit corporation while maintaining nonprofit oversight, though details remain sparse. This restructuring represents a critical moment in AI governance as OpenAI navigates intense scrutiny from co-founders, investors, and regulators while pursuing a potential $30 billion funding round.
The big picture: OpenAI has announced a revised restructuring plan that walks back its December 2024 proposal to sell the nonprofit’s controlling shares to the for-profit side of the company.
Key details: The new plan would convert OpenAI Global LLC into a public benefit corporation (PBC) while claiming to preserve nonprofit control.
- The nonprofit would be a significant (though not necessarily majority) shareholder of the PBC and reportedly able to appoint and remove PBC directors.
- Unlike the original “capped-profit” structure, the new PBC would issue ordinary stock with no ceiling on investor returns.
Why this matters: The restructuring comes amid significant pushback from multiple stakeholders concerned about OpenAI’s original mission.
- The December 2024 proposal triggered criticism from former employees and civil society groups along with a lawsuit from co-founder Elon Musk alleging abandonment of OpenAI’s charitable mission.
- The revised plan attempts to address these concerns while still pursuing substantial commercial funding.
Financial implications: The restructuring is tied to a potential $30 billion funding round led by SoftBank.
- Microsoft, OpenAI’s largest investor, holds veto power over structural changes and is currently negotiating its ownership percentage in the new PBC.
- The transition from a capped-profit model to unlimited investor returns represents a fundamental shift in OpenAI’s business approach.
Behind the numbers: Questions remain about whether nonprofit ownership and board appointment powers would provide sufficient control over the PBC’s operations and decision-making.
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