OpenAI ditches plan to become a for-profit company

OpenAI will reverse course on its plans to convert into a for-profit business, announcing on Monday its nonprofit will continue to have control of the artificial intelligence firm.

In a Monday letter to employees, CEO and co-founder Sam Altman said the company decided for the nonprofit to stay in control after hearing from civic leaders and holding discussions with the Attorney General Offices in California and Delaware.

"OpenAI was founded as a nonprofit, is today a nonprofit that oversees and controls the for-profit, and going forward will remain a nonprofit that oversees and controls the for-profit," Altman wrote. "That will not change.

The non-profit's for-profit arm will transition to a public benefit corporation (PBC) that will "consider the interests of both shareholders and the mission," Bret Taylor, chair of OpenAI's nonprofit board, wrote in a blog post Monday.

The nonprofit will control the PBC and be a "big shareholder in the PBC," which will give it the resources for more programs, Altman said.

"And as the PBC grows, the nonprofit’s resources will grow, so it can do even more. We’re excited to soon get recommendations from our nonprofit commission on how we can help make sure AI benefits everyone—not just a few," he said. "Their ideas will focus on how our nonprofit work can support a more democratic AI future, and have real impact in areas like health, education, public services, and scientific discovery. 

Altman said the structure "makes sense" for OpenAI, which he also said is "not a normal company and never will be."

OpenAI first announced its goal to restructure the company last year stating at the time it needed to “raise more capital than we’d imagined.”   

The decision hands a win to tech billionaire Elon Musk, who took great issue with the company's for-profit ambitions. Musk, an original co-founder of OpenAI, filed suit against Altman and OpenAI, alleging the company strayed from its roots to pursue profits over benefiting the public good.

Musk escalated tensions earlier this year when he led a consortium of investors in submitting a $97.4 billion bid to buy the assets of the nonprofit in control of OpenAI. Musk in February said it is "time for OpenAI to return to the open-source, safety-focused force for good it once was."

Altman quickly rejected this, stating OpenAI was "not for sale," and OpenAI's board of directors unanimously rejected the bid, which Musk's lawyer said the group would withdraw if OpenAI halted restructuring plans.