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Critics Say OpenAI’s Revised Restructuring Still Prioritizes Profit Over Public Good

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A group of former OpenAI employees and AI experts — including renowned computer scientist Geoffrey Hinton — has submitted a new letter to California and Delaware attorneys general, warning that OpenAI’s latest organizational restructuring still fails to uphold its founding mission of developing artificial intelligence for the benefit of humanity.

The group, calling itself Not For Private Gain, first criticized OpenAI earlier this year when the company proposed a plan to reduce control by its nonprofit parent entity. Facing backlash, OpenAI scaled back the changes and announced a revised plan in May: to convert its for-profit unit into a Public Benefit Corporation (PBC), with the nonprofit retaining major shareholder status.

Despite this shift, the group argues in its May 12 letter that the revised structure still allows for investor interests to outweigh ethical safeguards:

  • Under the current setup, OpenAI’s nonprofit has full operational control over the for-profit entity, including executive hiring and firing. The group says this control would be weakened under the new PBC, undermining accountability.

  • They also note that while the current for-profit entity is legally bound to prioritize OpenAI’s mission and charter over profits, a PBC has no such explicit legal obligation.

OpenAI responded, stating: “The nonprofit would continue to have control over the PBC, full stop. Any suggestion otherwise is not accurate.”

Broader Concerns and Musk’s Involvement:

The restructuring debate has sparked wider criticism, including from Elon Musk, OpenAI’s co-founder and now rival via his company xAI. Musk is currently suing OpenAI for allegedly breaching its founding agreement by prioritizing commercial goals over public benefit. A lawyer representing Musk backed the letter, dismissing OpenAI’s revised structure as “nothing but window dressing.”

OpenAI’s main corporate backer, Microsoft, has invested more than $13 billion, and the restructuring is viewed as a means to attract additional capital needed to remain competitive in the rapidly evolving and costly AI sector.

While a Public Benefit Corporation is designed to balance profits and public interest, critics remain skeptical that the new model will provide the necessary governance and enforcement mechanisms to prevent the misuse of powerful AI technologies.

OpenAI Retreats from Restructuring Plan, Nonprofit Retains Control Amid Lawsuit and Public Backlash

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OpenAI has reversed course on a major restructuring plan, announcing on Monday that its nonprofit parent will retain control over its for-profit arm — a move aimed at easing growing criticism and legal pressure, including a lawsuit from co-founder Elon Musk.

In a blog post, CEO Sam Altman emphasized that OpenAI will remain under nonprofit oversight, countering a December proposal to convert the for-profit unit into a Public Benefit Corporation (PBC). That plan, which would have diluted nonprofit control in favor of capital-raising flexibility, faced strong pushback from civic leaders, regulators, and former OpenAI insiders.

“We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware,” said Bret Taylor, chairman of OpenAI’s board.

While the nonprofit will remain the controlling entity and a major shareholder, OpenAI still plans to proceed with uncapping investor profits and revising its for-profit structure to attract future funding. The company is also working with Microsoft, regulators, and other stakeholders to finalize equity distribution under the updated plan.

However, critics say the announcement lacks clarity. Page Hedley, a former OpenAI ethics adviser, said the nonprofit’s reduced ownership stake raises questions about whether OpenAI’s mission — ensuring artificial general intelligence (AGI) benefits all of humanity — will remain legally paramount under the revised structure.

Meanwhile, Elon Musk’s lawsuit will proceed, with his legal team dismissing the move as a cosmetic change. Attorney Marc Toberoff argued that the new structure hides how much control the nonprofit has ceded to the for-profit business.

Despite the controversy, Altman said investor confidence remains strong, and that the company can still raise up to $40 billion in new funding, including a proposed round led by SoftBank at a $300 billion valuation.

The update comes as the AI arms race intensifies, with OpenAI seeking a delicate balance between mission fidelity and capital flexibility, all while navigating legal scrutiny, ethical concerns, and internal leadership tensions.

OpenAI Plans Restructuring, Giving CEO Sam Altman Equity and Reducing Non-Profit Control

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OpenAI, the company behind the widely popular AI application ChatGPT, is restructuring its business to transition from non-profit control to a for-profit benefit corporation, according to insider sources. This significant shift will make the company more attractive to investors. The non-profit arm will continue to exist, retaining a minority stake in the new for-profit entity, but will no longer hold control over it. The restructuring may also impact OpenAI’s governance of AI risks.

Sam Altman, the CEO of OpenAI, is set to receive equity in the company for the first time, which could be worth up to $150 billion. This restructuring may also remove the cap on returns for investors, further enhancing the company’s appeal. Altman, who previously chose not to hold equity, is now positioned to benefit financially from this major corporate shift.

OpenAI, originally founded as a non-profit research organization in 2015, gained global attention with the launch of ChatGPT in 2022. The AI application attracted over 200 million weekly active users and spurred immense interest in AI investments, leading to a surge in OpenAI’s valuation—from $14 billion in 2021 to $150 billion in the latest round of convertible debt financing.

Despite the success, OpenAI has experienced leadership changes. Chief technology officer Mira Murati left the company unexpectedly, while president Greg Brockman has been on leave. These changes, along with the restructuring plan, signal a broader shift within the company’s strategy and operations.

The restructuring moves OpenAI closer to a traditional startup model, resembling the structure of competitors like Anthropic and xAI. However, there are concerns about how this transition might affect OpenAI’s commitment to AI safety. The original governance structure was designed to ensure the safe development of artificial general intelligence (AGI), but with the shift away from non-profit control, some fear the company may lose accountability in managing long-term risks.

The reconfiguration of OpenAI’s governance comes nearly a year after a major internal dispute led to Altman’s brief ousting by the non-profit board. His reinstatement with overwhelming support from employees and investors has since led to a refreshed board, now chaired by former Salesforce co-CEO Bret Taylor. Approval from the nine-member non-profit board will be required for any changes to the corporate structure.

While Altman has previously stated that he has enough money and works for the love of it, this new development will offer him a stake in a company positioned at the forefront of the global AI race. Investors are largely supportive of the shift, as it could provide a clearer path for profitability, but the AI safety community remains cautious about the potential consequences for responsible AI development.