OpenAI announced plans to transition its existing for-profit structure into a Delaware Public Benefit Corporation (PBC), a move designed to balance shareholder interests with a public benefit mission. The company stated that this transition is essential to ensure that artificial general intelligence (AGI), or AI that can complete most tasks humans can, benefits all of humanity.

The current structure of OpenAI involves a for-profit organization controlled by a nonprofit, with a "capped profit" share for investors and employees. However, the company said that its current structure does not allow the board to directly consider the interests of those who would finance the mission. The shift to a PBC is aimed at enabling OpenAI to "raise the necessary capital with conventional terms," according to a company statement.

"As we enter 2025, we will have to become more than a lab and a startup — we have to become an enduring company. The world is moving to build out a new infrastructure of energy, land use, chips, data centers, data, AI models, and AI systems for the 21st century economy. We seek to evolve in order to take the next step in our mission."— OpenAI

The new PBC will run and control OpenAI’s operations and business, while the existing nonprofit arm will focus on charitable initiatives in sectors such as health care, education, and science. The nonprofit will receive shares in the PBC "at a fair valuation determined by independent financial advisors," according to OpenAI. The company believes this new structure will create one of the best-resourced nonprofits in history.

OpenAI was founded in 2015 as a nonprofit research lab, but as its experiments became more capital-intensive, it adopted a dual structure and took on investments from venture capital firms and companies like Microsoft. The company raised $6.6 billion in October at a $157 billion valuation, bringing its total raised to $17.9 billion. However, OpenAI still expects to lose about $5 billion this year and the terms of its latest funding round require that it completes the for-profit transition within two years.

Several AI firms, like Anthropic and Elon Musk’s xAI, are also registered as PBCs. According to OpenAI, the shift to a PBC structure will better align with the company's financial needs, stating, "We once again need to raise more capital than we'd imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness." The company said the hundreds of billions of dollars that major companies are investing into AI development demonstrates what it will really take for OpenAI to continue pursuing its mission.

Despite this move towards a for-profit model, OpenAI maintains that it will continue to operate both a for-profit and non-profit entity. The for-profit’s success will help the non-profit to be well-funded, better sustained, and in a stronger position for the mission. This move comes amid pressure to generate more revenue to cover the considerable costs of developing advanced AI systems.

The restructuring is not without controversy, with Elon Musk, a co-founder of OpenAI, suing the company to stop the transition to a for-profit corporation. Musk alleges that OpenAI has violated its founding mission by prioritizing profit. Meta Platforms has also urged California's attorney general to block OpenAI's move.

"Our current structure does not allow the Board to directly consider the interests of those who would finance the mission and does not enable the nonprofit to easily do more than control the for-profit."— OpenAI

The restructuring also coincides with some high level talent departures including chief technology officer Mira Murati who announced her resignation in September, along with research chief Bob McGrew and research vice president Barret Zoph. Former co-founder Ilya Sutskever and former safety leader Jan Leike also departed, with Leike expressing concerns that safety culture and processes had taken a back seat to "shiny products."

Despite these issues, OpenAI said it will pursue the transition to a PBC structure, removing the restrictions imposed by its current non-profit parent and aligning it with competitors such as Anthropic and xAI. The company believes this structure will enable it to better balance profitability with its mission of ensuring AGI benefits all of humanity.