OpenAI Completes Restructuring into For-Profit Company

OpenAI’s contested transition from a non-profit organization to a for-profit company is complete. Microsoft retains significant influence in the new structure.

In a blog post, Bret Taylor, chairman of OpenAI’s board of directors, announces the restructuring. OpenAI is splitting into a non-profit Foundation and a for-profit Group, under which its AI activities will fall. A move that, according to Taylor, “reflects the world’s collective interests,” but in practice is primarily intended to attract more investors.

OpenAI has been working on its restructuring for a long time. The move met with considerable resistance, including from former founder Elon Musk. Musk even offered nearly a hundred billion dollars to acquire the company and halt the restructuring: a plan that failed. After an agreement with Microsoft in September, the path was finally clear.

Renewed Vows

Microsoft maintains tight control with 27 percent of the shares in the OpenAI Group. Microsoft’s stake in OpenAI is now estimated to be worth approximately 135 billion dollars, roughly ten times what it invested. The non-profit OpenAI Foundation will hold 26 percent, while the remaining 45 percent is for employees and investors.

The restructuring can be seen as a renewal of vows between OpenAI and Microsoft. After both OpenAI and Microsoft openly began flirting with other parties, it seemed as though the partners had grown tired of each other. Now they will remain bound to each other until at least 2032.

Until this year, Microsoft retains access to OpenAI’s intellectual property (read as: AI models). OpenAI will also reinvest 250 billion dollars in Azure services, but is allowed to sell its own services independently of Azure.

This can only change if OpenAI reaches the point of “artificial general intelligence”: the goal the company strives for. If that moment arrives, it will have to be verified by an external party.

For-profit without Profit

With the restructuring, OpenAI’s status will also change. The transformation into a for-profit company means that OpenAI will eventually have to generate profit to keep investors on board. This is currently a sensitive issue for the company. OpenAI’s market value is estimated at half a billion dollars.