ChatGPT-maker OpenAI has announced that its nonprofit will maintain control over the business behind ChatGPT and other AI products, reversing plans to transition into a for-profit entity. Should we term it Surprise or Shock – Or both. The announcement follows months of internal debate, external scrutiny, and escalating conflicts with key stakeholders, including Microsoft and co-founder Elon Musk. “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,” CEO Sam Altman wrote in a letter to employees.
Bret Taylor, chair of OpenAI’s nonprofit board, added that the board opted to retain nonprofit oversight, converting OpenAI’s for-profit arm into a public benefit corporation that balances shareholder interests with its mission.
Microsoft and OpenAI becoming competitors, kinda
The move comes amid heightened tensions with Microsoft, OpenAI’s largest investor, which has poured billions into the company and integrated ChatGPT into its Azure cloud platform and products like Copilot. Sources familiar with the matter indicate Microsoft pushed for a for-profit restructuring to secure greater control and faster commercialization, creating friction with OpenAI’s leadership. Altman reportedly clashed with Microsoft executives over governance and the pace of AI deployment, with Microsoft seeking a stronger hand in shaping OpenAI’s strategic direction. Neither company has publicly commented on these disputes. As analysts say, Microsoft and OpenAI seem to understand that the two partners are quickly becoming competitors.
Elon Musk, the Sam Altman’s enemy No. 1
Adding to the complexity, OpenAI faces a lawsuit from co-founder Elon Musk, who accuses Altman and the company of abandoning its founding nonprofit mission to safely develop artificial general intelligence (AGI). Musk, who invested in OpenAI’s early days alongside Altman and others, claims the shift toward commercialization betrays its original principles. A federal judge recently dismissed some of Musk’s claims but allowed others to proceed to trial next year, intensifying the legal battle.
The OpenAI announcement comes just days after, a judge narrowed the claims that Elon Musk can pursue in his lawsuit alleging that OpenAI broke its promise to function as a public charity by making plans to transform itself into a for-profit business. The US District Judge Yvonne Gonzalez Rogers in Oakland, California, reportedly ruled that fraud claims can proceed against OpenAI in the suit filed last year by Musk. She also declined to dismiss some claims against OpenAI’s ally Microsoft Corp.
Protests from former employees and …
OpenAI, valued at $300 billion with 400 million weekly ChatGPT users, has also drawn scrutiny from Delaware and California authorities, where it is incorporated and headquartered, respectively. Advocates, including former OpenAI employees and nonprofit groups, petitioned California Attorney General Rob Bonta and Delaware Attorney General Kathy Jennings to block the for-profit conversion, citing risks to OpenAI’s public mission, especially if it achieves AGI capable of outperforming humans.
The decision to remain nonprofit-controlled aims to address these concerns while navigating pressures from Microsoft’s commercial ambitions and Musk’s legal challenges. OpenAI’s leadership emphasized its commitment to balancing innovation with its founding goal of advancing AI safely for humanity’s benefit.
