OpenAI Reinforces Nonprofit Control Following Elon Musk’s $97B Takeover Attempt

• OpenAI announced on Monday that it will continue to be controlled by a nonprofit.
• The U-turn follows the ChatGPT-maker facing immense pushback to its for-profit transition plans from ex-employees and civic leaders.
• The company’s board denied a $97.4 billion acquisition bid led by Elon Musk in February.

OpenAI has reversed its earlier plans to become a fully for-profit entity.

In a blog post on Monday, the company announced that its nonprofit division will retain control over its for-profit operations, even as the organization transitions to a Public Benefit Corporation (PBC).

The announcement comes after OpenAI rejected a $97.4 billion takeover offer led by Elon Musk, who has been a vocal critic of the company’s restructuring plans.

OpenAI Retains Nonprofit Status

On Monday, OpenAI stated that the organization would “continue to be overseen and controlled” by its nonprofit board.

Valued at $300 billion and backed by Microsoft, OpenAI said the decision followed consultations with civic leaders and lawmakers.

The organization’s for-profit arm, which has been under nonprofit control since 2019, will now become a PBC, a corporate structure that legally requires consideration of shareholder interests and a defined public mission.

“Our mission remains the same, and the PBC will have the same mission,” the company emphasized.

Former Employees Push Back

OpenAI’s move comes amid mounting pressure from former employees and civil society organizations who opposed the proposed restructuring.

In a letter sent last month to California and Delaware attorneys general, the group argued that transitioning to a for-profit model would “subvert OpenAI’s charitable purpose” and eliminate essential governance protections.

Page Hedley, a former employee and head of the watchdog group Not For Private Gain, said that although OpenAI appeared to have taken concerns seriously, “crucial questions remain.”

“Will OpenAI’s commercial interests remain legally subordinate to its charitable mission?” she said in a statement .

“And who will ultimately own the technology OpenAI develops?” she added.

Musk vs. OpenAI

OpenAI has been steadily commercializing its widely used AI technologies, such as ChatGPT and the video-generation tool Sora.

However, efforts to transition into a for-profit organization have faced significant obstacles, particularly from early investor and current rival Elon Musk.

OpenAI and Musk have been embroiled in a high-profile legal dispute since he left the company in 2018.

Musk has launched several lawsuits against OpenAI, accusing the company of drifting from its original mission of prioritizing profit over public benefit.

In February, a group of Musk-led investors submitted a $97.4 billion offer to acquire OpenAI’s assets, arguing the move would realign the company with its open-source, safety-first origins.

OpenAI’s board firmly rejected the proposal, with CEO Sam Altman calling Musk’s attempt a “tactic” to undermine the organization.

Altman Dismisses Musk For AGI

Speaking to journalists on Monday, Altman downplayed Musk’s influence on the company’s direction.

“We are obsessed with our mission and what it takes to fulfill that,” he said. “You all are obsessed with Elon — that’s your job, and more power to you. But we are here to focus on our mission, and that has not changed.”

In a letter to employees the same day, which was also shared in its blog post, Altman reiterated OpenAI’s commitment to developing Artificial General Intelligence (AGI).

“We now see a path for AGI to become the most capable tool in human history, empowering individuals directly,” Altman wrote.

“If we succeed, we believe people will build extraordinary things for one another and drive lasting improvements in society and quality of life.”