OpenAI to remain nonprofit, abandons restructuring plans

ChatGPT developer OpenAI has abandoned plans to transform into a for-profit company and reaffirmed its commitment to its nonprofit status.

In a May 5 blog post, OpenAI confirmed plans to transform its for-profit business unit into a so-called public benefit corporation (PBC), which will continue to be controlled by a nonprofit. A PBC is a for-profit company that is legally obligated to prioritize a social mission while looking after the interests of shareholders.

The plans mark a policy shift for OpenAI, which had previously floated plans for a for-profit conversion that involved spinning off a nonprofit entity.

"OpenAI was originally founded as a nonprofit and is currently supervised and controlled by that nonprofit. It will continue to be supervised and controlled by that nonprofit going forward," the ChatGPT developer said.

In a letter announcing the decision to employees, OpenAI CEO Sam Altman said the move would not affect OpenAI's ability to raise funds for AI development, which "currently requires hundreds of billions of dollars and may ultimately require trillions of dollars."

In 2024, OpenAI took a very different view, saying a for-profit entity was "necessary" to raise funds to amass the "massive computing power" needed to run AI models.

Controversial Plans

OpenAI was originally founded as a nonprofit in 2015, and in 2019 it formed a for-profit entity, purportedly to help AI developers raise funds. The for-profit arm has been controlled by the nonprofit since then.

In 2024, Tesla CEO Elon Musk — one of OpenAI’s co-founders — sued Altman for “violating the terms of Musk’s foundational contributions to the charity,” according to a November court filing.

In the lawsuit, Musk accused Altman of “subtly manipulating Musk into co-founding their sham nonprofit OpenAI” while secretly planning to turn OpenAI into a for-profit entity.

Musk has since founded xAI, the developer of the AI ​​chatbot Grok, which he says has fallen victim to OpenAI’s alleged anticompetitive behavior.

OpenAI leadership expects its revenue to reach $29.4 billion by 2026, Bloomberg reported in March. Revenue is expected to reach $12.7 billion in 2025.

In March, OpenAI raised $40 billion from Softbank at a $300 billion valuation.