OpenAI emphasizes its nonprofit governance during legal dispute with Elon Musk.

OpenAI has revealed a major shift, reversing earlier intentions to become a conventional profit-driven organization in a statement released on May 5.

Instead of transitioning into a for-profit model, the organization has chosen to uphold its nonprofit identity and transform its for-profit division into a Public Benefit Corporation (PBC), reaffirming its dedication to addressing public interests in the field of artificial general intelligence (AGI).

The announcement indicates that adopting the PBC framework will enable OpenAI to generate income while the nonprofit parent remains in control and maintains significant equity in this new setup.

The organization highlighted that this strategy has become increasingly common among leading AI research labs that seek funding while prioritizing safety and long-term consequences.

OpenAI’s CEO, Sam Altman, indicated that the nonprofit will continue to play a crucial role in guiding the organization’s decisions. He mentioned that this modified structure was created following discussions with community leaders and regulatory authorities, including attorneys general from California and Delaware.

Altman emphasized that retaining nonprofit oversight will provide OpenAI with the necessary resources to grow responsibly. He also expressed the ambition for the nonprofit branch to become one of the most impactful in history, with the goal of ensuring that AGI is beneficial to all.

He remarked:
“Rather than our existing, complex capped-profit framework—which was reasonable in an environment where there might have been a single dominant AGI initiative but is less applicable now with many significant AGI companies—we are adopting a conventional capital structure where all parties hold stock. This is not a sale, but a simplification of the structure.”

OpenAI’s change in direction occurs amid mounting legal disputes with Elon Musk, one of its co-founders.

Musk has accused the organization of straying from its founding principles and filed a lawsuit earlier this year to prevent its move toward profit-centric objectives.

Significantly, Musk also proposed a $97 billion offer to acquire control of OpenAI’s nonprofit arm, but this was declined.

Following OpenAI’s announcement, Musk’s legal representatives reportedly dismissed the changes as superficial.

The legal team contended that the new structure permits private individuals, including Sam Altman and Microsoft, to benefit from resources that were originally designated for the public interest.

In a related development, OpenAI recently filed a countersuit against Musk, claiming he attempted to undermine the organization through a misleading takeover proposal and a coordinated effort to harm its reputation.