Elon Musk gets a win as ChatGPT maker OpenAI scraps for-profit plans

OpenAI, the company behind ChatGPT, announced on Monday that it will continue to be run under nonprofit control, dialling back a controversial plan to become a for-profit organisation.

Some major investors had been pushing OpenAI to shift to a traditional for-profit model, which would allow the Microsoft-backed company to offer equity to key staff and attract more investment.

In a message to employees, CEO Sam Altman said, "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware."


Here’s how OpenAI now describes its structure:

• The company was originally founded as a nonprofit and will remain under its governance.
• Its for-profit entity, part of the nonprofit structure since 2019, will become a Public Benefit Corporation (PBC), required to balance mission with shareholder interests.
• The nonprofit will continue to oversee and remain a significant shareholder in the PBC, ensuring it has the resources to support its public mission.
  
  

OpenAI also confirmed that its core mission remains unchanged, and the same applies to the PBC’s purpose.

Founded in 2015 by Sam Altman and Tesla CEO Elon Musk, among others, OpenAI later introduced a “capped” for-profit model to raise funding, while limiting investor profits. Microsoft soon became its biggest early backer.

However, in 2023, the company faced internal upheaval when the board abruptly fired Altman. Staff pushed back, leading to his swift return and the departure of the board members behind the move.

This turmoil led some investors to call for a switch to a standard for-profit structure within two years, arguing that it would bring more stability.

Musk and OpenAI

Last year, Musk filed a lawsuit against OpenAI and Altman, claiming the organisation had deviated from its original mission to serve humanity rather than chase profit.

OpenAI responded by saying that it only considered changing its nonprofit control to raise more capital.

With the latest decision, the nonprofit’s stake is expected to grow in value, giving it more funding to support its aims.

Musk, who left OpenAI before it gained momentum, stepped down from the board in 2018. Tensions between him and the company have simmered ever since.