OpenAI, the artificial intelligence company behind ChatGPT, is reportedly in early discussions with regulators in California and Delaware to transition from a nonprofit to a for-profit structure. The change, if it proceeds, would mark a significant shift in governance for the $157 billion company, founded in 2015 with the mission of advancing safe and beneficial artificial intelligence.
According to sources cited by Bloomberg, OpenAI has begun conversations with the California attorney general’s office and Delaware regulators. These discussions involve managing complex legal requirements, including how to leverage OpenAI’s core assets, which largely consist of proprietary intellectual property. California law requires nonprofit assets to be earmarked for charitable purposes if a company changes its structure — a potential challenge given that OpenAI’s primary assets are proprietary technologies like ChatGPT.
The restructuring aims to make OpenAI more attractive to investors, a direction the company has been exploring since at least September.
OpenAI’s recent funding activities highlight the urgency of these conversations. In October, the company completed a $6.6 billion funding round, giving it a valuation of about $157 billion and placing it among the world’s most valuable private companies. Despite this success, OpenAI projects will remain unprofitable until at least 2029.
The move is not without controversy. Tech entrepreneur Elon Musk, an early backer of OpenAI, questioned the ethics of the for-profit pivot after investing $50 million in the company. OpenAI has made it clear that if the change proceeds, the nonprofit arm will “receive full value” for its participation and continue its mission of promoting ethical AI, according to the board chair.