OpenAI moves to remove non-profit control, give Sam Altman equity

• Published On: 26 September 2024 at 20:24

Reuters reported that governance changes are taking place behind the scenes at OpenAI, one of the most influential AI firms.

The restructuring process, which is still being developed with input from lawyers and shareholders, has no set completion date, creating uncertainty about when these changes will be implemented.

This internal restructuring coincides with a number of leadership changes. Mira Murati, the long-serving chief technology officer, abruptly announced her resignation Wednesday. OpenAI's president, Greg Brockman, has also been on leave, indicating further upheaval at the company's top levels.

OpenAI, which was founded in 2015 as a non-profit AI research entity, established a for-profit subsidiary, OpenAI LP, in 2019 to raise funds, including a significant investment from Microsoft. The company gained global attention in late 2022 when it released ChatGPT, a generative AI tool that generates human-like text responses. The app's rapid success—more than 200 million weekly active users—has fueled a race to invest in AI technologies.

OpenAI's valuation has risen from $14 billion in 2021 to a whopping $150 billion in a new convertible debt round, attracting high-profile investors including Thrive Capital and Apple.

OpenAI's hybrid structure, with its for-profit arm completely controlled by the nonprofit, was originally intended to ensure the mission of developing safe, beneficial artificial general intelligence. However, the governance model came under fire last November during a dramatic boardroom clash that saw CEO Sam Altman briefly removed and then reinstated within five days, with overwhelming support from employees and investors.

Since then, the board has been reshuffled with experienced tech executives, led by Bret Taylor, a former co-CEO at Salesforce. Any corporate changes must still be approved by the nonprofit's nine-member board.

If nonprofit control is reduced or eliminated, OpenAI may function more like a traditional startup, which investors welcome but raises questions about the company's ability to hold itself accountable for AI safety. Earlier this year, OpenAI disbanded its "superalignment" team, which was in charge of mitigating long-term risks associated with AI.

While the restructuring plans are being implemented, there are still questions about CEO Sam Altman's equity in the company. Altman, a billionaire due to his extensive startup investments, has previously stated that he chose not to take an equity stake in order to maintain an independent board of directors. He has also stated that he is motivated by passion for his work rather than financial gain.

If the restructuring proceeds, OpenAI's structure may begin to resemble that of rival AI firms such as Anthropic and Elon Musk's xAI, both of which operate as benefit corporations that balance profitability and social responsibility.