OpenAI abandons plan to become a for-profit company

OpenAI chairman Bret Taylor says the company is abandoning its effort to switch from a nonprofit to a for-profit entity after "hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California." Both attorneys general have oversight of OpenAI's nonprofit status and […]

May 5, 2025 - 22:59

OpenAI abandons plan to become a for-profit company

OpenAI chairman Bret Taylor says the company is abandoning its effort to switch from a nonprofit to a for-profit entity after "hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California." Both attorneys general have oversight of OpenAI's nonprofit status and could have blocked its planned restructuring, which Elon Musk, Meta, and others have publicly protested.

Now, OpenAI's nonprofit board - the one that briefly fired CEO Sam Altman - will continue to oversee its commercial subsidiary, which is being changed from a capped, for-profit business to a public benefit corporation (PBC) like Anthropic and xAI. Previously, investors in OpenAI's commercial entity were capped at making 100 times their money before the rest of its profits flowed back to the nonprofit.

With the new PBC subsidiary, OpenAI spokesperson Steve Sharpe tells me that investors and employees will own regular stock with no cap on how much it can appreciate. The goal, he says, is to make it easier for OpenAI to raise more money in the future. The billions of dollars the company raised in its last two funding rounds were …

Read the full story at The Verge.