OpenAI, the American tech innovation company, is exploring a change in its corporate structure after recently securing $6.6 billion in funding, which doubled its valuation to $150 billion. The focus is on adopting a Public Benefit Corporation (PBC) model to mitigate the risk of hostile takeovers and protect its CEO, Sam Altman, from external pressures.
Currently, OpenAI operates under a hybrid structure combining a Nonprofit with a Limited Partnership (LP). This setup allows OpenAI LP, the commercial entity, to function with a "limited profit" model, capping investor returns, like those from Microsoft, at 100x. The nonprofit holds controlling interest to align business operations with its public mission. However, as AI becomes more central, this structure struggles under commercial pressures and competitive demands.
Following recent management changes, with key figures like the CTO and previous chief scientist leaving, OpenAI's executive team largely revolves around Altman. The planned shift to a PBC model is aimed at enhancing resilience against hostile takeovers and balancing profit with societal goals, a structure embraced by competitors like xAI and Anthropic.
PBCs, a relatively novel corporate form in the U.S., especially in Delaware, require balancing profit with public interest goals. This dual mission helps directors resist external pressures, including lucrative acquisition offers, without shareholder lawsuits. This structure is appealing to AI companies dealing with public scrutiny and the need for significant funding.
OpenAI's board is considering this restructuring, which will maintain a nonprofit entity focused on its mission to benefit humanity. This entity will independently manage research and technology, ensuring alignment with OpenAI's goals.
OpenAI has reaffirmed its commitment to developing AI that benefits everyone and working with its board to stay mission-focused while retaining its nonprofit core.
