OpenAI announced on Tuesday that it has completed its corporate reorganization and split its AI laboratory into a for-profit company under a non-profit foundation structure. The complex legal process had previously faced strong opposition from co-founder Elon Musk.
Under the new structure, the non-profit OpenAI Foundation will have legal control over a public benefit corporation called OpenAI Group. OpenAI Group is free to raise capital or acquire companies without legal restrictions. The foundation holds a significant stake in OpenAI Group and has the right to appoint the board of directors.
Brett Taylor, chairman of OpenAI, said in a blog post: "We believe that the world's most powerful technologies must be developed in a way that reflects the common interests of the world. The completion of this reorganization allows us to continue to promote the forefront of AI and ensure that progress benefits everyone through an updated company structure."
Under the new structure, the OpenAI Foundation will hold 26% of the for-profit entity, with the option of acquiring more shares if the company continues to grow. Early investor Microsoft holds about 27% of the shares, with a market value of about US$135 billion, and the remaining 47% is owned by investors and employees.
According to Microsoft's blog, the deal will also extend Microsoft's intellectual property rights to the OpenAI model until 2032. The agreement also requires the company to submit to an independent panel of experts for verification if OpenAI announces it has achieved its long-sought goal of general artificial intelligence.
Previously, OpenAI operated as a non-profit organization and was subject to strict equity rules. However, this model is becoming increasingly unsustainable due to the increasing scale of financing. In April this year, SoftBank announced a record investment of US$30 billion in OpenAI, premised on the company's smooth transformation into a for-profit enterprise. According to The Information, the last tranche of funds has recently arrived, marking a breakthrough in the restructuring.
During this period, Musk tried to acquire OpenAI, bidding $97.4 billion. In addition, the judicial departments of California and Delaware have also launched legal investigations into the reorganization process. Taylor said these inquiries drove discussions that led to the company making a number of changes to its structure that would benefit OpenAI and the public.
After the news was announced, OpenAI CEO Sam Altman announced that he and chief scientist Jakub Pachocki would hold a public live video broadcast at 10:30 am Pacific time to answer questions from the outside world.