OpenAI scraps plans to become for-profit company, will remain nonprofit

SAN FRANCISCO (KRON) — ChatGPT maker OpenAI has apparently scrapped its plan to transition into a for-profit business. The San Francisco-based company, which is one of the leading names in artificial intelligence, was founded as a nonprofit.

The Sam Altman-led firm had spent months pursuing a plan to convert itself into a for-profit business. However, on Monday, OpenAI abruptly reversed course and said it will continue to operate as a nonprofit.

“We made the decision for the nonprofit to retain control of OpenAI 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,” said OpenAI Chairman Bret Taylor. “We thank both officers and we look forward to continuing these important conversations to make sure OpenAI can continue to effectively pursue its mission of ensuring AGI benefits all of humanity.”

Although it is based in San Francisco, OpenAI is incorporated in Delaware.

In a letter to employees Monday, Altman said as the company evolves its structure, “we want our nonprofit to be the largest and most effective nonprofit in history that will be focused on using AI to enable the highest-leverage outcomes for people.”

Altman and Taylor said the board made the decision for the nonprofit to retain control of OpenAI. The nonprofit already has a for-profit arm, but that arm will be converted into a public benefit corporation “that has to consider the interests of both shareholders and the mission,” Taylor said.

OpenAI’s co-founders, including Altman and Tesla CEO Musk, originally started it as a nonprofit research laboratory on a mission to safely build what’s known as artificial general intelligence, or AGI, for humanity’s benefit. Nearly a decade later, OpenAI has reported its market value as $300 billion and counts 400 million weekly users of ChatGPT, its flagship product.

The Associated Press contributed to this report.