OpenAI stays nonprofit after dropping restructuring plans

OpenAI will remain a nonprofit, reversing plans for corporate restructuring after discussions with public officials and legal authorities. CEO Sam Altman said the decision came after consultations with government leaders and the attorneys general of California and Delaware. OpenAI will continue collaborating with Microsoft and recently appointed independent commissioners.

This marks a shift from the earlier proposal to convert OpenAI into a public benefit corporation (PBC), a move that would have reduced the nonprofit's control. Instead, the nonprofit will now maintain full authority, surprising investors and reshaping the company's trajectory.

Critics like Elon Musk had warned that the original plan risked weakening oversight of AI development. Musk filed a lawsuit alleging breach of an implied contract and unjust enrichment. The court partially ruled in his favor, though some claims were dismissed.

OpenAI also faced pressure from legal experts, scientists, and former employees concerned about the dangers posed by superintelligent AI.

While the nonprofit retains control, OpenAI plans to convert its commercial subsidiary into a PBC with a more streamlined equity model, though its mission remains unchanged.

This decision could impact future funding. For instance, SoftBank may scale back a proposed $30 billion investment to $20 billion if OpenAI does not fully commercialize by the end of 2025.