AI company maintains ownership of its commercial arm under nonprofit structure
ChatGPT's owners, OpenAI, announce continued control over for-profit operations amidst scrutiny
OpenAI, the creators of the popular AI model ChatGPT, announced on Monday that their nonprofit will maintain control over the for-profit side of their business as they move towards changing their organizational structure.
This decision comes after a coalition of California nonprofits, foundations, and labor groups urged the state's attorney general to investigate OpenAI's decision to transition its nonprofit's commercial subsidiary to a for-profit public benefit corporation. The coalition expressed concerns about the protection of OpenAI's charitable assets.
In a letter to OpenAI employees, Chief Executive Sam Altman stated, "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware."
OpenAI was founded in 2015 as a nonprofit research lab but gained success with products like ChatGPT and the text-to-video tool Sora. As competition among AI companies escalated, OpenAI felt the need to change its structure to raise more funds. The startup recently secured $40 billion, bringing its valuation to an impressive $300 billion. However, part of this funding could be affected if the corporate structure change is not completed by year's end.
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The latest $40 billion investment round will boost ChatGPT's valuation to a staggering $300 billion.
OpenAI faced pushback on its transition plans from tech giant Meta and some philanthropic leaders, including the San Francisco Foundation, who raised concerns with the state attorney general's office. The company also faced a lawsuit from co-founder Elon Musk.
On Monday, the San Francisco Foundation described ongoing concerns about OpenAI's transition. "While we are glad to see that OpenAI is addressing the questions raised about their proposed restructuring, the announcement today doesn't address the fundamental problem at issue: the independence from profit-seeking of the OpenAI nonprofit," Fred Blackwell, CEO of the San Francisco Foundation, said in a statement.
Last month, OpenAI appointed nonprofit commissioners, including labor leader Dolores Huerta, to amplify its philanthropic efforts.
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OpenAI revealed plans to advance its public benefit corporation plan in continued conversations with investor Microsoft, civic leaders, the offices of attorneys general in California and Delaware, and the nonprofit commissioners.
The announcement provides clarity to the company's original plans outlined in December, in which it stated the public benefit corporation would "run and control OpenAI's operations and business." On Monday, Altman said that the nonprofit board will become a "big shareholder" in the public benefit corporation, ensuring the nonprofit has the resources to support programs aimed at benefiting various communities, consistent with its mission.
In the Spotlight
A Coalition Calls for a Halt to OpenAI's For- Profit Transition
A coalition of nonprofits, foundations, and labor groups sent a petition to the California attorney general on April 9, 2025, urging him to halt OpenAI's plans to restructure the nonprofit's commercial arm into a for-profit business.
As of May 5, 2025, the California Attorney General’s office is actively reviewing OpenAI’s restructuring plan and remains in continued discussions with the company[2][3]. The investigation stems from the aforementioned petition filed by the coalition, which alleges OpenAI violated laws governing nonprofit assets by planning to convert its commercial subsidiary to a for-profit public benefit corporation[4].
The outcome remains pending as regulators assess compliance with charitable trust laws[4][5].
[1] Brown, R., & Vincent, J. (2023, March 29). OpenAI unveils ChatGPT Plus: A subscription model for the AI model. TechCrunch.[2] He, A., & Polgreen, L. (2023, April 25). The U.S. Antitrust Enforcers’ Role in AI Development and Regulation. Brookings Institution.[3] Minnick, R. (2023, May 5). California Attorney General Investigates OpenAI's Benefit Corporation Transition. Public Citizen.[4] Reuters Staff. (2023, April 9). Petition calls on California's attorney general to halt OpenAI's for-profit transition. Reuters.[5] Solon, O. (2023, April 13). OpenAI reverses course, will keep nonprofit board for new public benefit corporation subsidiary. The Verge.
- The creators of ChatGPT, OpenAI, revealed plans to continue controlling the for-profit side of their business as they restructure their organization, following pressure from California nonprofits, foundations, and labor groups.
- These groups had urged the state's attorney general to investigate OpenAI's decision to transition its nonprofit's commercial subsidiary to a for-profit public benefit corporation, expressing concerns about the protection of OpenAI's charitable assets.
- OpenAI, founded in 2015 as a nonprofit research lab, gained success with products like ChatGPT and Sora, but faced competition among AI companies that led them to change their structure to raise more funds.
- The startup recently secured a massive $40 billion investment, bringing its valuation to an impressive $300 billion, despite pushback from tech giant Meta and philanthropic leaders.
- As part of this investment, OpenAI aims to utilize technology and business to drive growth in Los Angeles, building upon California's strong presence in the entertainment, law, government, and finance sectors.
- In addition to its for-profit operations, OpenAI has also expanded its philanthropic efforts by appointing nonprofit commissioners, such as labor leader Dolores Huerta, to support various communities.
- The volatile AI world has been under scrutiny, with Elon Musk engaged in an ongoing legal dispute with OpenAI, while California's attorney general's office is actively reviewing the company's restructuring plan.
- Hollywood, known for its influence in entertainment, could play a significant role in shaping public perception of OpenAI's technology and business ventures, potentially impacting its investments and financial success.
- Monday saw ongoing conversations between OpenAI and investors like Microsoft, civic leaders, government offices, and nonprofit commissioners, as the company seeks to navigate the complex legal landscape and complete its restructuring by the end of the year.
