OpenAI's board is negotiating to restructure the company, splitting it into a for-profit entity and a newly formed charitable arm valued at around $30 billion. The move aims to allow OpenAI to raise more funds for AI development but faces hurdles, including determining Microsoft's equity stake and navigating potential antitrust concerns. Elon Musk opposes the change, arguing the non-profit arm is worth significantly more.
OpenAI CEO Sam Altman. The company's board is locked in complex negotiations to become a for-profit company. Photograph: JASON REDMOND/AFP via Getty ImagesOpenAI’s board is locked in complex negotiations to become a for-profit company, struggling to determine the price of Microsoft’s stake in the start-up while holding talks to value its newly formed charitable arm at $30 billion.
“That is a new phenomenon where non-profits have stakes in the for-profit,” said Karla Dennis, chief executive of tax advisory KDA, who added that such transactions were more typically paid in cash.A restructuring will create “one of the best resourced non-profits in history”, according to OpenAI. But some, including Elon Musk, argue that the true value of the non-profit is far higher, given its current control over OpenAI, which has been valued at $157 billion.
The proposed transaction has led to vociferous lawsuits from Musk, an OpenAI co-founder who has since set up a rival group, xAI. Musk has sought an injunction against the conversion, claiming OpenAI has duped early donors, including himself, who thought they were backing a research group. People close to the negotiations are hopeful the transaction can be completed this year, but added that the conversations are subject to change and likely to carry on for some months.That decision falls on OpenAI’s board, which includes Altman, former Salesforce chief Bret Taylor and former US Treasury secretary Larry Summers. They owe their principal duty to “humanity, not OpenAI investors”, according to the start-up’s charter.
OPENAI FOR-PROFIT NON-PROFIT AI MICROSOFT ELON MUSK CHATGPT
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