OpenAI on Tuesday said it had completed its recapitalization, splitting the AI lab into a for-profit corporation nested inside a non-profit foundation. It’s the end result of a complex legal process that had been strenuously resisted by its estranged co-founder, Elon Musk.
Under the new structure, the non-profit OpenAI Foundation will have legal control over a public benefit corporation called OpenAI Group, which is free to raise funding or acquire companies without legal restraint. The Foundation will hold a significant stake in OpenAI Group and will appoint its board of directors.
“We believe that the world’s most powerful technology must be developed in a way that reflects the world’s collective interests,” OpenAI chairman Bret Taylor wrote in a blog post. “The close of our recapitalization gives us the ability to keep pushing the frontier of AI, and an updated corporate structure to ensure progress serves everyone.”
Under the new structure, the OpenAI Foundation will own 26% of the for-profit, with a warrant for additional shares to be granted if the company continues to grow. Microsoft, an early investor in OpenAI, will hold a roughly 27% stake, valued at about $135 billion, with the remaining 47% held by investors and employees.
According to a separate blog post by Microsoft, the deal will also extend Microsoft’s IP rights to OpenAI models through 2032. If OpenAI ever declares that it has achieved its long-held goal of artificial general intelligence, the deal will also require it to submit to an independent expert panel for verification.
Prior to this recapitalization, OpenAI was operating as a non-profit under strict equity restrictions – a position that became increasingly untenable as the company’s fundraising became more ambitious. In April, SoftBank announced an unprecedented $30 billion investment into OpenAI, contingent on the company’s successful conversion into a for-profit. On Saturday, The Information reported that the final installment of the funding had been sent, signaling a possible breakthrough in the restructuring.
There have been a number of legal efforts to block or otherwise influence the restructuring, most notably from Elon Musk, who at one point offered to acquire the company for $97.4 billion.
The attorneys general from California and Delaware, who had raised concerns about the conversion, will allow the process to proceed, subject to further conditions published by both offices. Notably, the California agreement requires OpenAI to “continue to undertake measures to mitigate risks to teens and others in
connection with the development and deployment of AI and of AGI.”
In the announcement post, Taylor cited discussions with the state offices as a positive influence on the process. “We made several changes as a result of those discussions and we believe OpenAI-and as a result, the public we serve-are better for them,” Taylor wrote.
In the wake of the news, CEO Sam Altman announced an open livestream with chief scientist Jakub Pachocki to answer questions from the public. The event will begin at 10:30 a.m. Pacific Time.
Author: Russell Brandom
Source: TechCrunch
Reviewed By: Editorial Team
