OpenAI to evolve into a for-profit company

28 Dec 2024

OpenAI to evolve into a for-profit company
1

OpenAI, the harbinger of the open architecture Artificial Intelligence (AI) revolution, on Friday announced plans to create a public benefit corporation to oversee commercial operations as it evolves into a for-profit company.

Open AI in a blog post said its for-profit structure should evolve to support non-profit operations, as against its earlier view that its non-profit structure should be able to support for-profit operations.

In the process, it will remove some of its non-profit restrictions and allow itself to function more like a high-growth startup.

The board of directors of OpenAI is currently evaluating its corporate structure that would support the mission of bringing the benefits of artificial general intelligence to all. The board said it is looking at a structure that is best for the long-term success of the mission by making non-profit sustainable.

For that, however, the for-profit structure should be well funded to sustain the non-profit operations better and over the longer term, the board said, adding that this would require capital market funding, rather than private equity.

Currently Microsoft is funding most of OpenAI’s operations. With over $10 billion investment, Microsoft is perhaps the largest investor in OpenAI.

OpenAI, which has a current valuation of $157 billion, also received various forms of funding, including cash, of $137M (nearly a third of which was from Elon Musk), credits and discounts totalling $1.8 million from Amazon and over $50 million each from Azure and Google Cloud, to support its non-profit structure.

The board said the capital required for sustained operations by simultaneously advancing AI’s capability, safety, and positive impact in the world, is more than imagined. It is in the face of this challenge that a change in OpenAi’s current structure has become necessary, it added.

The board said OpenAI started off in 2015 as a research lab with the vision of realising AGI. But, in the initial stages, thought that progress relied on ideas rather than supercomputing devices. It employed a variety of toolkits for a variety of applications, ranging from game-playing AI to robotics research and published papers. 

In 2022, OpenAI brought out ChatGPT, a tool used by over 300 million people worldwide, and for free in most cases.

And, in 2024, OpenAI discovered new o-series models with new reasoning capabilities and computing capacity.

But, as the new year arrives, the realisation has dawned that like major companies investing huge amounts into AI development, OpenAI too needs capital to continue pursuing the mission. 

The board expects the PBC to run and control OpenAI’s operations and business, with the non-profit arm pursues charitable initiatives in sectors such as health care, education, and science.

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