OpenAI is weighing the possibility of changing its corporate structure, multiple sources familiar with the matter told the Financial Times today.
The move would reportedly be intended to help the company draw more investor interest. Earlier this week, multiple publications reported that OpenAI is in the process of raising a new funding round worth several billion dollars. The investment, which could reportedly include the participation of Microsoft Corp., Nvidia Corp. and Apple Inc., is expected to value the ChatGPT developer at more than $100 billion.
OpenAI originally launched in 2015 as a nonprofit. In 2019, it established a for-profit arm to lead its artificial intelligence development efforts. The for-profit arm’s work is supervised by the board of the original nonprofit that launched in 2015.
There are also other unusual details about OpenAI’s organizational structure. Its for-profit arm has caps designed to limit the maximum returns that investors and employees can realize on their shares. OpenAI’s website states that the goal of this arrangement is to “incentivize them to research, develop, and deploy AGI in a way that balances commerciality with safety and sustainability.”
According to today’s Financial Times report, investors in the AI provider are required to sign a contract that states “it would be wise to view any investment in [OpenAI’s for-profit subsidiary] in the spirit of a donation.” The document goes on to caution that OpenAI may never turn a profit.
The ChatGPT developer’s corporate structure is currently the focus of a lawsuitfrom Elon Musk. The complaint alleges that OpenAI positioned itself as a nonprofit dedicated to developing open-source artificial intelligence models when it launched in 2015, but breached this commitment when it formed its for-profit arm. After the lawsuit was filed, OpenAI published an email in which Musk appears to back the idea the AI provider should adopt a for-profit approach.
OpenAI has reportedly not yet decided how to change its corporate structure. According to today’s report, one possibility is that it may remove the caps on investors’ returns.
It’s unclear whether the option of reincorporating OpenAI as a regular company is also on the table. Such a shift might enable the AI developer to eventually go public. A stock market listing would give Microsoft, as well as the participants in the funding round that OpenAI reportedly raising, a new opportunity to realize a return on their investments.
OpenAI has reportedly agreed to provide 75% of its profits to Microsoft until the latter company makes back its investment. The AI developer is not yet profitable: it’s on track to lose $5 billion by year’s end according to a July report in The Information. OpenAI has reportedly spent $8.4 billion to date on its AI development efforts.
The Financial Times’ sources said that there’s a possibility the AI provider will eventually opt not to change its corporate structure. OpenAI told the paper in a statement that “we remain focused on building AI that benefits everyone and as we’ve previously shared we’re working with our board to ensure that we’re best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist.”