OpenAI to stay nonprofit, scrap proposed overhaul

ChatGPT-maker OpenAI has abandoned plans to become a for-profit company and reaffirmed commitment to its nonprofit status. 

In a May 5 blog post, OpenAI confirmed plans to convert its for-profit business unit into a so-called Public Benefit Corporation (PBC), which would remain under the nonprofit’s control. PBCs are for-profit companies that are legally obligated to prioritize a social mission alongside the interests of shareholders.

The plans mark a reversal for OpenAI, which had previously floated a for-profit conversion involving spinning out the nonprofit entity.

“OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit,” the ChatGPT-maker said. 

This can be done without compromising OpenAI’s ability to raise funds for AI development, which “currently requires hundreds of billions of dollars and may eventually require trillions of dollars,” OpenAI’s CEO, Sam Altman, said in a letter to employees announcing the decision.

In 2024, OpenAI took a starkly different view, asserting that the for-profit entity was “necessary” for raising capital to amass the “vast quantities of compute” needed to run AI models. 

Related: OpenAI expects to 3X revenue in 2025 but Chinese AI firms are heating up

Controversial Plans 

OpenAI was originally founded as a nonprofit in 2015, and in 2019 it created a for-profit entity purportedly to help AI developers raise funds. The for-profit unit has remained under the nonprofit’s control since then. 

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

In the lawsuit, Musk alleges Altman “assiduously manipulated Musk into co-founding their spurious nonprofit venture, OpenAI,” while secretly planning to convert OpenAI to a for-profit entity. 

Musk has since launched xAI, the developer of AI chatbot Grok, which he said has fallen victim to OpenAI’s allegedly anti-competitive practices.

OpenAI’s leadership expects its revenue to hit $29.4 billion by 2026, Bloomberg reported in March. It forecasts earning revenues of $12.7 billion in 2025.

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

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