OpenAI Abandons Profit-Seeking Transformation
OpenAI announced on May 5, U.S. time, that it will abandon its transformation into a profit-seeking company and return to its original non-profit operating model. In the future, OpenAI’s non-profit organization will regain full control over all operational and commercial activities of the company.
According to the official statement, the non-profit organization will continue to control OpenAI while transforming its current profit-seeking division into a Public Benefit Corporation (PBC). This move was made after discussions with the offices of the Attorneys General of California and Delaware, highlighting the significance of legal considerations, public pressure, and commitment to mission in shaping the company’s future direction.
OpenAI Abandons Profit-Seeking Transformation
As one of the founders of OpenAI, Elon Musk filed a lawsuit last year requesting the court to prevent OpenAI from becoming a profit-making company. Although the injunction request was dismissed in March this year, some of the lawsuits continue, during which Musk also made a bid of $97.4 billion to acquire OpenAI. Consequently, OpenAI’s latest statement has drawn industry attention to whether Musk and OpenAI CEO Sam Altman’s months-long showdown has produced a winner.
Altman: OpenAI Will Remain a Non-Profit Organization
According to OpenAI’s official statement, the company will undergo a structural reorganization, making the non-profit organization “OpenAI Inc.” the sole controller of the company’s assets and business. The previously established profit-seeking subsidiary “OpenAI Global LLC” will transition to a Public Benefit Corporation (PBC) and will be fully controlled by OpenAI Inc., altering the dual-structure model of the past few years. Altman stated in the announcement that after careful consideration, the decision was made to return OpenAI to its original mission and structure, “OpenAI was initially a non-profit organization and will continue to be a non-profit organization overseeing and controlling profit-seeking entities; this will not change.” OpenAI was founded in December 2015 by Altman, Musk, Ilya Sutskever, and Greg Brockman as a non-profit organization with the explicit goal of “ensuring that artificial general intelligence (AGI) benefits all of humanity.” Initially, the founders believed that the non-profit 501(c)(3) structure was the most effective vehicle for developing safe and beneficial AGI, free from profit motives. However, as funding demands for AI research grew, OpenAI made significant structural adjustments in 2019, introducing a “capped profit” model. This hybrid structure allowed OpenAI to establish profit-seeking subsidiaries to attract investment while maintaining control of the non-profit organization, ensuring the company continues to prioritize its mission over profit maximization.
As of now, Microsoft has invested $13.75 billion in OpenAI, making it its largest investor. In early 2024, OpenAI was valued at $80 billion in a new round of financing and amended its articles of incorporation to provide greater autonomy for profit-making activities. However, just over a year later, the company announced its return to a non-profit governance model. The question is, why did OpenAI encounter obstacles in its profit direction?
Legal and Regulatory Pressure as the Main Reason
The primary reason for OpenAI’s abandonment of its complete profit-seeking plan is significant pressure from legal and regulatory agencies. In a statement in May 2025, OpenAI board members Bret Taylor and Altman confirmed that this decision was made “after considering the opinions of civic leaders and discussing with the offices of the Attorneys General of California and Delaware.” According to non-profit law, charitable organizations cannot arbitrarily change their overall purpose, especially concerning assets already committed to that purpose. Any substantial changes require court authorization, and the relevant state Attorneys General must be listed as “necessary parties.” This legal framework may constitute a significant barrier, as:
According to the cy pres principle, a charitable organization may only change its purpose when fulfilling its purpose becomes illegal, impossible, impractical, or wasteful: this is a quite high threshold. If there are grounds to change the purpose, the charitable organization’s assets must be used for charitable purposes reasonably close to the original purpose of the organization. OpenAI’s original mission of “ensuring AGI benefits all of humanity” is central to its organizational identity. A complete shift to a profit structure could jeopardize this mission, as it would place profit motives above public interest. According to non-profit tax attorney Rose Chan Loui, any structural changes need to “allow the non-profit organization to maintain control over technological development,” especially considering OpenAI’s fundamental purpose is to ensure AGI is developed safely and beneficially. In summary, OpenAI’s decision to abandon its transformation into a profit company can be summarized in three points:
- A public letter from former OpenAI employees and AI researchers urging the Attorneys General of California and Delaware to investigate whether the structural changes are consistent with non-profit obligations.
- Musk’s high-profile lawsuit accusing the company of straying from its founding mission.
- The California Alliance of Charitable Organizations calling for an investigation, questioning whether OpenAI’s planned new business structure will fulfill its charitable mission.
These external pressures collectively formed a powerful force prompting OpenAI to reassess its purely profit-driven plans.
Dilemma! Not Seeking Profit Is Not Altman’s Decision Alone
“OpenAI’s statement is a clear evasion, failing to address the core issue: charitable assets have already and will continue to be transferred for the benefit of individuals, including Altman, his investors, and Microsoft,” said Marc Toberoff, the chief attorney responsible for Musk’s lawsuit against OpenAI. He stated that OpenAI’s new decision “has not caused any change,” indicating that Musk’s lawsuit against OpenAI will continue. Furthermore, Microsoft’s status as the largest investor and partner will be a significant factor in OpenAI’s restructuring success or failure. According to Bloomberg reports, insiders indicated that Microsoft wants to ensure that any structural changes at OpenAI sufficiently protect Microsoft’s investment and is currently actively negotiating the details of OpenAI’s proposals. Altman also stated that OpenAI is still in communication with civic organizations, prosecutorial agencies, and Microsoft, “We look forward to ongoing dialogue with them, Microsoft, and our newly appointed non-profit commissioner to advance the details of the plan.”
This article is a collaborative reprint from: Digital Age
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Source: OpenAI, Reuters, New York Times, Bloomberg
Editor: Li Xiantai