OpenAI Will Now Operate As a Commercial Company.
When OpenAI was founded in 2015 , its founders (including Sam Altman and Elon Musk) decided to make it a nonprofit. The organization’s original goal was to ensure that artificial general intelligence (AGI)—a type of AI that is theoretically better than humans at most tasks—benefits everyone.
The company has undergone several changes over the years. It ceased to be a true nonprofit in 2019 , when it switched to a “capped profit” structure that limited profits to 100 times any investment. Musk even sued the company last year , claiming it had abandoned its original mission in favor of profits. But now, OpenAI resembles a traditional for-profit company more than ever. On Thursday , it announced that it would now operate under a new for-profit entity called OpenAI Group PCB, a public benefit corporation. The nonprofit arm of OpenAI, now called the OpenAI Foundation, owns a $130 billion stake in OpenAI Group PCB and oversees the for-profit company.
OpenAI states that it is paying particular attention to how this move will impact its goals of achieving AGI and ensuring that AGI “benefits all humanity.” OpenAI believes that the better its commercial operations perform, the more resources the OpenAI Foundation will have to continue its philanthropic work.
In this regard, according to OpenAI, the OpenAI Foundation is dedicating $25 billion to two key goals. The first is healthcare and disease control, as the OpenAI Foundation will strive to create open medical datasets and provide funding to scientists. The second goal is to improve “AI resilience,” which OpenAI defines as “maximizing the benefits of AI and minimizing its risks.”
According to OpenAI, the OpenAI Foundation and the OpenAI Group share the same mission, and the terms of the new structure require the commercial side to advance this mission.
What does this mean for OpenAI?
OpenAI says this move is the best of both worlds for the company. It maintains that it will continue to operate with the same values and goals as before the restructuring, but will also gain greater freedom to raise capital to fund these projects.
The second point is certainly true. CEO Sam Altman has been working for nearly two years to restructure the company so it can more easily compete financially with other commercial AI companies like Amazon, Google, and Meta. Other pure-play AI companies, such as Anthropic and xAI, also employ a similar structure.
This move has already bolstered OpenAI’s funding : Japanese company SoftBank had previously pledged $40 billion in investments: $10 billion in April and another $30 billion in December. However, these investments were contingent on the company’s restructuring plans. Had OpenAI not restructured, SoftBank would have reduced its investment to $20 billion. By strengthening its commercial core, OpenAI earned the additional $20 billion.
OpenAI also agreed to extend its agreement with Microsoft , which allows the latter to use and sell OpenAI products. The original agreement ran until 2030 and allowed OpenAI to terminate the deal if the company reached AGI. Now, the agreement runs until 2032, even if OpenAI reaches AGI, provided the technology has “appropriate safeguards.” An independent review panel will determine whether OpenAI has reached AGI. OpenAI’s research rights will remain restricted until OpenAI reaches AGI or until 2030, whichever comes first.
It’s no secret that AI is big business, so this move could actually continue OpenAI’s numerous financial successes. It could also fuel the race to achieve AGI, as it now allows Microsoft to reach that level using OpenAI technology. But this news raises a long-standing and troubling question: are we in an AI bubble? And will it burst? OpenAI currently has $1 trillion in AI contracts, though its actual revenue is only $13 billion . Perhaps the restructuring will allow the company to find more profitable sources of income, but even now, AI is attracting significant investment without delivering the tangible returns one might expect.