New OpenAI Restructuring Subordinating Nonprofit to For-profit is ‘Impermissible’
WASHINGTON, D.C. — Today, the artificial intelligence startup OpenAI announced that it completed its restructuring, rendering its nonprofit arm subordinate to its for-profit business.
In response, Public Citizen co-president Robert Weissman issued the following statement:
“Today’s announcement from OpenAI is an attempt to entrench the status quo, in which OpenAI Nonprofit serves at the beck and call of OpenAI For-profit, even though the nonprofit is supposed to exert operational control over the for-profit.
“With this new arrangement, OpenAI Nonprofit (now called OpenAI Foundation) will both have a roughly 25 percent share interest in the for-profit AND formal control over the for-profit through the original charter arrangement creating the for-profit.
“Since the November 2023 coup at OpenAI, there is no evidence whatsoever of the nonprofit exerting control over the for-profit, and only evidence of the reverse. Consistently, OpenAI has rushed dangerous new technologies to market, in advance of competitors and without adequate safety tests and protocols. The evidence for this continues to mount, including recently with the rushed introduction of the Sora 2 video generator — which threatens to destroy social norms of truth – and the announcement that ChatGPT will generate erotica.
“De facto, what is planned with this announcement is that OpenAI Foundation will function as a corporate foundation, doing some good work but for the underlying purpose of advancing the interests of OpenAI For-Profit. The problem is, that’s not how OpenAI Nonprofit was formed or what it is required to do – the for-profit was (dubiously) created to advance the mission of the nonprofit, not the reverse.
“Practically, the harms are two fold. OpenAI Foundation will have enormous resources. One project it announced it will pursue is “technical solutions to AI resilience.” This sounds like a project designed to advance OpenAI For-profit’s interests – but that is illegitimate. Moreover, can anyone imagine OpenAI Foundation pursuing a strategy that contradicts OpenAI’s business interests? The obvious answer is no, which is another signal that this arrangement is impermissible.
“The second harm is that this arrangement will help entrench unaccountable leadership at OpenAI For-profit. Based on the past two years, we can expect OpenAI Foundation to leave dormant its power (and obligation) to exert control over OpenAI For-profit. This matters tremendously, because by structure the shareholders will always be subordinate to OpenAI Foundation’s controlling interest. Moreover, we can also expect OpenAI Foundation’s 25 percent share to always be aligned with management, further buffering management from shareholder pressure.
“This is an arrangement that should not be allowed to stand. It would have been better if for-profit forces had never been able to seize control of OpenAI. But at this point, the simple and clear solution for this morass is for the attorneys general of California and Delaware to exert their authority to dissolve OpenAI Nonprofit and reallocate its resources to new organizations in the charitable sector. These resources include the $130 billion share interest plus the value of its independent controlling interest in the for-profit.”