OpenAI Becomes For-Profit as it Reshapes Its Future with Microsoft
OpenAI, the company behind the popular AI platform ChatGPT, has officially shifted to a for-profit structure that could pave the way for an IPO and help the tech company raise billions in new funding.
In the wake of its conversion to a Public Benefit Corporation (PBC), OpenAI announced a restructuring of its ownership and partnership with Microsoft. Under this new agreement, Microsoft now holds a 27% stake in OpenAI, making it a major player in the company's future, with a stake worth over $100 billion. This comes after nearly a year of legal discussions and negotiations, during which OpenAI faced scrutiny from regulators in Delaware and California, who were concerned about the company’s evolving governance.
With its new status, OpenAI is now free to compete with industry giants like Google, Amazon, and Meta on a more equal footing. The restructuring also opens the door for future funding opportunities, with OpenAI now valued at $500 billion. This deal allows the company to operate more like a traditional business, while still being guided by its original nonprofit entity, the OpenAI Foundation, which will continue to have significant oversight.
In this new chapter, OpenAI will be able to profit from its groundbreaking AI technology, like ChatGPT, which has become a cultural phenomenon since its release in 2022. With 800 million weekly active users, OpenAI’s AI-powered products are now poised to expand further. However, the company is facing both praise and criticism for its foray into for-profit status. While it may allow OpenAI to build even more ambitious AI models, critics warn that the pursuit of profit could compromise safety measures and responsible development.
At the heart of this restructuring is the relationship between OpenAI and Microsoft, which has been a key investor and collaborator since 2019. Microsoft will continue to have access to OpenAI’s technology until 2030, but there’s a new stipulation: once OpenAI declares that it has achieved artificial general intelligence (AGI), an expert panel will verify the declaration before Microsoft’s rights to OpenAI’s technology continue. This change marks a pivotal shift as OpenAI moves closer to developing AGI, which is often seen as the holy grail of artificial intelligence.
Despite the glowing reports from Microsoft and OpenAI about the deal, some critics argue that the nonprofit’s control over the for-profit entity is more symbolic than substantial. Robert Weissman of Public Citizen, a nonprofit consumer group, expressed concern that the nonprofit’s influence would be diluted under this new arrangement.
The shift also comes amidst mounting concerns about the safety and ethical implications of AI. OpenAI has faced scrutiny over the potential mental health impacts of ChatGPT, especially after lawsuits involving young users and the AI's ability to simulate relationships. In response, OpenAI has begun implementing safeguards, including parental controls and safety features to prevent harmful interactions. Still, some worry that the profit motive could overshadow these precautions.
