Facing pressure from regulators and civic groups over its plan to restructure part of its operation as an independent for-profit company, OpenAI said Thursday the original non-profit holding company would retain control of the new entity. As part of the restructuring, the non-profit will also hold a $100 billion stake in the spun off Public Benefit Corporation (PBC), “making it one of the most well-resourced philanthropic organizations in the world.”
“OpenAI started as a nonprofit, remains one today, and will continue to be one—with the nonprofit holding the authority that guides our future,” chairman Bret Taylor said in a statement posted on the company’s website.
“This structure reaffirms that our core mission remains ensuring AGI benefits all of humanity,” Taylor added. “Our PBC charter and governance will establish that safety decisions must always be guided by this mission.”
The restructuring plan is essential for OpenAI as a condition of roughly $19 billion in equity financing provided by investors. If the company is unable to complete the restructuring by the end of the year it could lose access to that capital, or see part of it convert from equity to debt. Both would be a blow to management’s plans for an eventual initial public offering and its ability to fund the planned buildout of new, giant datacenters.
The plan has drawn opposition from civic and labor groups in California and Delaware, however, over how assets now held in charitable trust by the non-profit parent will be treated in the conversion. The attorneys general of the two states are also scrutinizing the plan for signs that it violates their states’ respective laws on charitable organizations.
“We continue to work with the California and Delaware Attorneys General as an important part of strengthening our approach, and we remain committed to learning and acting with urgency to ensure our tools are helpful and safe for everyone,” Taylor said.
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The statement on the restructuring plan came as OpenAI and Microsoft announced a new, non-binding agreement on the structure of their partnership going forward. Terms of the agreement were not disclosed. But the Wall Street Journal reported that Microsoft and the OpenAI non-profit will each receive a 30% stake in the new for-profit company, citing people familiar with the matter.
“We are actively working to finalize contractual terms in a definitive agreement,” the companies said in a joint statement.
Microsoft was an early and is still the largest individual investor in OpenAI, pumping roughly $14 billion into the company over the past four years. It has also been the AI company’s exclusive cloud computing provider.
More recently, strains have appeared in the relationship, however. Microsoft’s investments did not equate to an equity stake in OpenAI and over the years it has pushed for greater control. OpenAI has also grown frustrated over Redmond’s grip on its operations. Per the Journal, the relationship had grown so fractious over the summer that OpenAI considered appealing to antitrust regulators to try to break the contract.
The new agreement with Microsoft clears the way for OpenAI to take its restructuring plan to state regulators.
