OpenAI Restructures to Fuel AI Race, But Profit Motive Raises Concerns

OpenAI, the maker of ChatGPT, is revamping its corporate structure, shifting its for-profit arm to a public benefit corporation (PBC) designed to prioritize societal interests alongside shareholder value, reports Reuters. This move, confirmed Friday in a blog post, follows news reports in September that sparked debate among corporate watchdogs and tech figures, including Elon Musk, over OpenAI's commitment to its stated mission amidst its rapid growth.

The restructuring is aimed at attracting significant investment as OpenAI intensifies its pursuit of artificial general intelligence (AGI), AI that surpasses human intelligence. The company's recent $6.6 billion funding round, at a valuation of $157 billion, was contingent on restructuring to remove investor profit caps within two years, as Reuters reported in October.

OpenAI's existing for-profit arm will become a Delaware-based PBC, a corporate structure that legally mandates consideration of societal good alongside profit maximization. This move aligns OpenAI with competitors like Anthropic and xAI, both of which have also adopted PBC structures and secured substantial funding.

"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," OpenAI stated in its Friday announcement. "The hundreds of billions of dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission."

However, OpenAI's restructuring faces potential hurdles. Musk, an OpenAI co-founder who later exited and is now a vocal critic, is attempting to block the move, alleging that OpenAI prioritized profit over public good. He has filed a lawsuit against OpenAI and Sam Altman, its CEO. Meta Platforms is also urging California's attorney general to block the conversion to a for-profit entity.

While PBC status signifies a commitment to public benefit, Ann Lipton, a corporate law professor at Tulane Law School, notes that it "doesn't actually have any real enforcement power behind it." Ultimately, shareholders retain control, dictating how closely the company adheres to its stated mission.

"The key to the announcement is that the for-profit side of OpenAI 'will run and control OpenAI's operations and business,'" DA Davidson & Co analyst Gil Luria told Reuters. "This is the critical step the company needs to make in order to continue fund raising," Luria said, although he added that the move does "not necessitate OpenAI going public."

OpenAI's restructuring underscores the escalating financial demands of the global AI race, while also raising questions about the alignment of corporate interests with broader societal goals.