OpenAI announces plan to transform into a for-profit company

OpenAI has laid out plans to become a for-profit company. In a blog post published on Friday, OpenAI’s board said it will replace the company’s existing structure with one that puts control into the hands of its for-profit arm.

Going into 2025, OpenAI plans to become a Public Benefit Corporation⁠ (PBC), which is a for-profit company meant to operate for the good of society. This division will “run and control OpenAI’s operations and business,” while OpenAI’s nonprofit will retain a stake in the business but lose its oversight role.

The nonprofit will operate separately with its own leadership team and staff “to pursue charitable initiatives in sectors such as health care, education, and science.” The board said the structure will allow OpenAI to “raise the necessary capital” to build toward artificial general intelligence while also creating “one of the best resourced non-profits in history.” OpenAI’s competitors, including Anthropic and Elon Musk’s xAI, also operate as PBCs.

Rumors about OpenAI’s transition into a for-profit company have been swirling for months as the company looks for ways to appeal to investors and raise money to keep its data-hungry AI models up and running. In September, Bloomberg reported that CEO Sam Altman would receive around a 7 percent equity stake as part of OpenAI’s plans to become a for-profit company, something Altman reportedly denied.

“The hundreds⁠ of⁠ billions⁠ of⁠ dollars that major companies are now investing into AI development show what it will really take for OpenAI to continue pursuing the mission,” the board wrote. “We once again need to raise more capital than we’d imagined. Investors want to back us but, at this scale of capital, need conventional equity and less structural bespokeness.”

Under the structure outlined by OpenAI’s board, the nonprofit would get shares in the PBC “at a fair valuation determined by independent financial advisors.” Concerns about keeping OpenAI’s nonprofit board in control boiled over last year, when its members ousted Altman but later reinstated him.

Even with these plans to switch to a for-profit, OpenAI could have a fight on its hands. Last month, Elon Musk filed a motion to stop OpenAI from becoming a for-profit company, while Meta CEO Mark Zuckerberg similarly asked California Attorney General Rob Bonta to block the transition.