OpenAI Blinks: Scraps For-Profit Plan After Outside Pressure

In a blog post overnight, the OpenAI Board revealed that its nonprofit arm would retain control of the chatbot company following backlash over its attempt to restructure into a for-profit business.

“We made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California,” the OpenAI Board wrote in a blog post. 

Last fall, OpenAI’s Sam Altman was preparing to overhaul the company’s structure and transition to a for-profit business—an effort that sparked a heated legal battle with co-founder Elon Musk, who sought to keep OpenAI ‘open’.

The board provided new details about OpenAI’s evolving structure:

• OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit.

• Our for-profit LLC, which has been under the nonprofit since 2019, will transition to a Public Benefit Corporation (PBC)–a purpose-driven company structure that has to consider the interests of both shareholders and the mission.

• The nonprofit will control and also be a large shareholder of the PBC, giving the nonprofit better resources to support many benefits.

• Our mission remains the same, and the PBC will have the same mission.

“We want our nonprofit to be the largest and most effective nonprofit in history that will be focused on using AI to enable the highest-leverage outcomes for people,” Altman wrote in a letter to employees. 

He also provided details about OpenAI’s evolving structure:

• OpenAI’s nonprofit will remain in control of the organization after discussions with civic leaders and attorneys general from California and Delaware.

• The for-profit LLC will convert to a Public Benefit Corporation (PBC)—a mission-aligned model also used by other AI labs like Anthropic and X.ai.

• This move replaces the old capped-profit structure with a simpler equity-based model, but does not represent a sale.

• The nonprofit will retain oversight and become a major shareholder in the PBC, giving it more resources to advance AI for broad societal benefit.

• A new nonprofit commission will help guide efforts to ensure AI supports public good in areas like health, education, science, and public services.

• OpenAI says this new structure will enable it to make faster and safer progress toward its mission of democratizing AGI.

Meanwhile, Marc Toberoff, lead counsel for Elon Musk in the ongoing lawsuit against OpenAI, told Bloomberg via email that Altman’s decision to scale back for-profit plans “changes nothing.”

“OpenAI’s announcement is a transparent dodge that fails to address the core issues: charitable assets have been and still will be transferred for the benefit of private persons, including Altman, his investors and Microsoft,” Toberoff said.

In March, US District Judge Yvonne Gonzalez Rogers blocked Musk’s request to stop Altman from restructuring OpenAI into a for-profit company. This led the judge to expedite a trial for this fall.

Given “the public interest at stake and potential for harm if a conversion contrary to law occurred,” Rogers said, adding that an expedited trial later this year would be on “core” claim that OpenAI’s structure conversion plan is unlawful and “potentially the interrelated contract-based claims.”

Earlier this year, a Musk-led group offered to purchase OpenAI for around $100 billion, a bid that was quickly rejected.