Public Citizen Rejects OpenAI Plan To Maintain Status Quo
WASHINGTON, D.C. – OpenAI, the company famous for creating ChatGPT, announced today that it is scrapping a plan to separate its commercial operations from the founding non-profit into a for-profit company. Public Citizen had previously urged the California attorney general to investigate whether OpenAI should be allowed to continue operating as a nonprofit — presenting evidence in favor of dissolving the non-profit and reallocating its funds to the nonprofit sector.
In response to today’s announcement, Public Citizen co-president Robert Weissman issued the following statement:
“OpenAI’s announcement is effectively a commitment to maintain the status quo, with some changes around the margins. The problem is, the status quo arrangement at OpenAI has failed to uphold the enterprise’s nonprofit mission. Since the November 2023 coup, OpenAI has consistently led the industry in subordinating safety concerns and rushing risky technologies to market – far more so than for-profit competitors like Microsoft and Google.
“Under the new arrangement, OpenAI nonprofit will continue to have a controlling interest in the for-profit, now accompanied by some shareholding. Since the nonprofit has done nothing discernible in the past to control or in any way restrain the for-profit, there’s no reason to think it will do so in the future.
“The new arrangement does suggest a transfer of economic assets (shares) to OpenAI Nonprofit, and suggests the nonprofit will engage in substantial philanthropy. The scale of that philanthropy will depend on whether the shares are encumbered and can be sold. But much more importantly, based on experience, there’s no reason to expect the OpenAI Nonprofit to operate as anything other than a corporate philanthropy.
“Public Citizen has argued for more than a year that OpenAI is not upholding its nonprofit mission, and this new arrangement doesn’t change our views. Absent any evidence that the nonprofit will behave like an independent nonprofit – which, among other things, means exerting actual control over the for-profit – we continue to believe that the for-profit should spin off into an independent company, after paying fair market value to the charitable sector. Determining that value requires an independent evaluation but probably now approaches $100 billion. Crucially, payment must be made not to OpenAI Nonprofit, which should be dissolved, but to a new independent charitable enterprise (or enterprises).
“As details unfold about OpenAI’s new proposal, questions to ask include: What share value is being transferred to OpenAI Nonprofit? How are those shares encumbered? Can OpenAI sell them? Can OpenAI vote those shares against management? Is there any reason at all to expect OpenAI Nonprofit to act with more independence going forward? How, if at all, is this deal satisfying investors, who reportedly had demanded a severing of the relationship with OpenAI Nonprofit? And, how are insiders being compensated in the deal?”