Meta Platforms has called on California’s Attorney General Rob Bonta to intervene and prevent OpenAI from transitioning to a for-profit business model, according to a report by the Wall Street Journal on Friday. In a letter sent to the attorney general on Thursday, Meta expressed concerns that permitting OpenAI to become a for-profit company would create a troubling precedent.
Meta argued that such a move would allow startups to benefit from nonprofit status until they are ready to become profitable, thereby unfairly giving investors the advantages of both nonprofit tax benefits and for-profit gains. The letter cautioned that if OpenAI’s shift to a for-profit model were allowed, it could have “seismic implications” for Silicon Valley.
The company’s concerns center around the potential for nonprofit investors to receive the same financial benefits as traditional for-profit investors, while still enjoying the tax write-offs associated with nonprofit status. Meta has not yet responded to a request for comment, and the California Attorney General’s office was also silent on the issue.
This latest development comes after OpenAI, in its own legal battle, urged a federal judge in California to dismiss Elon Musk’s request to halt the conversion of the company to a for-profit entity. Musk, a former co-founder of OpenAI, filed a lawsuit in August, accusing the organization of prioritizing profit over public good in its AI development.
Musk, who launched his own AI company, xAI, has argued that OpenAI’s shift undermines its mission and represents a violation of contract agreements. In November, Musk sought a preliminary injunction in federal court to stop the transition.
OpenAI has responded by asserting that any restructuring would preserve the nonprofit’s continued existence and ensure it receives full value for its stake in the new for-profit entity, with a mission-driven focus. OpenAI’s chairman, Bret Taylor, emphasized that the nonprofit would continue to thrive and be able to pursue its goals.
In their letter, Meta also expressed support for Musk’s efforts to ensure public interests are considered in the decision to allow OpenAI to convert to a for-profit structure.