
OpenAI has revealed its strategy to shift towards a for-profit business model. In a recent blog post, OpenAI’s board announced plans to overhaul the company’s existing structure, transferring control to its for-profit arm. As OpenAI enters 2025, it plans to transition into a Public Benefit Corporation (PBC), a for-profit entity designed to operate for the benefit of society. The new for-profit division of OpenAI will take charge of managing and overseeing the company’s day-to-day operations and business decisions. On the other hand, the nonprofit arm of OpenAI will still be a shareholder, but it will not be involved in the governance or management decisions moving forward.
The nonprofit division will operate autonomously, led by its own team dedicated to supporting charitable initiatives in areas like healthcare, education, and science. The board stated that this structure will help OpenAI secure the essential funding to advance toward artificial general intelligence, while also creating “one of the best resourced non-profits in history.” OpenAI’s competitors, including Anthropic and Elon Musk’s xAI, have also adopted the Public Benefit Corporation (PBC) model.
Speculations regarding OpenAI’s shift towards a for-profit model have been prevalent for several months, as the company seeks to attract investors and secure the funding necessary for the operation of its data-intensive AI models. In September, Bloomberg disclosed that CEO Sam Altman was expected to obtain approximately a 7 percent equity stake as part of OpenAI’s strategy to transition into a for-profit entity, a claim that Altman has reportedly refuted.
The board explained that the large investments being made by major companies into AI development highlight the amount of money OpenAI needs to continue its mission. They stated that they now need to raise more capital than they had initially expected.
The nonprofit would receive shares in the PBC “at a fair valuation determined by independent financial advisors,” according to the structure laid out by OpenAI’s board. Last year, concerns about the control of OpenAI’s nonprofit board led to a situation where they removed Altman from his position but later brought him back.
OpenAI may encounter challenges despite its intentions to transition to a for-profit business model. Elon Musk submitted a plea last month to stop OpenAI from turning into a for-profit business. Simultaneously, Mark Zuckerberg, the CEO of Meta, requested California’s Attorney General Rob Bonta to halt the transition.
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