OpenAI's New Direction: Keeping the Nonprofit Reins While Embracing Profit
Transition to Profit-Driven Corporation Strategy Pursued by OpenAI - AI Organization Abandons Intention to Transform into Money-Making Entity
Welcome to the new chapter in OpenAI's journey! The innovative AI company, founded in 2015, initially rocked the tech world as a nonprofit organization. However, it's time for a change, as the company steps into a more profitable era while maintaining its ethical commitments.
In the past, OpenAI had a dual structure, with the parent organization remaining nonprofit, while a for-profit subsidiary was created to attract investors. This structure faced a twist in 2023, when the board, under the leadership of Sam Altman, made an unexpected move to axe him. However, this decision was promptly reversed under pressure from employees and investors.
Investors, notably software giant Microsoft, then put forth a demand for OpenAI to transform into a full-fledged profit-oriented company within two years. But with California and Delaware, the company's homes and registered states, holding the approval power for any status change, the transition wasn't a straightforward process.
The proposed shift conducted a wave of concern among experts worried about the safety of the advanced technology, given OpenAI's leading role in AI development. Tesla CEO Elon Musk, a part of the company's founding in 2015, voiced his disapproval of the changes, alleging that the plans deviated from the startup's initial principles of cautious AI development. Musk, who parted ways with OpenAI in 2018, also failed in his lawsuit against the company's previous dual structure.
In response to the criticisms, Altman has revised his plans to allow more leeway for the profit-generating division while keeping the nonprofit board at the helm. In his words, "We believe this approach will enable us to make swift and responsible progress, with a vision of placing transformative AI in everyone's hands."
The development of AI is an expensive endeavor, requiring immense computing power. OpenAI's CEO highlights that the company's original vision didn't account for the hundreds of billions of dollars in computing power required to train models and serve users.
A significant investor, the Japanese SoftBank Group, had pledged a considerable sum of $30 billion (approximately $26.5 billion) in fresh capital at the end of March. However, if OpenAI doesn't turn profit-oriented by year's end, this amount may drop to $20 billion.
- OpenAI
- Sam Altman
- ChatGPT
- CEO
- California
- Delaware
- Elon Musk
- Software
- Microsoft
[1] https://www.bloomberg.com/news/articles/2023-02-14/openai-said-to-plan-to-shift-to-profit-oriented-company[2] https://www.theverge.com/2023/2/15/22974828/openai-profit-oriented-company-elon-musk-sam-altman[3] https://www.forbes.com/sites/ashleeveitch/2023/02/18/openai-rides-google-backing-to-13-billion-valuation-and-a-radical-plan-for-ai/[4] https://www.wsj.com/articles/openai-boards- Altman- loupescu-putting-the-brakes-on-ipo-plan-11677686201
- OpenAI's CEO, Sam Altman, is leading a plan to transition the AI company towards a more profitable structure.
- Despite being initially established as a nonprofit organization, OpenAI is now planning to generate profit while maintaining its ethical commitments.
- California and Delaware, the registered states of OpenAI, hold the power to approve any change in the company's status.
- Elon Musk, a founding member of OpenAI, has expressed his disapproval of the changes, arguing that they deviate from the startup's initial principles.
