A coalition of labor and nonprofit organizations is urging California Attorney General Rob Bonta to prevent OpenAI from transitioning into a for-profit entity, citing concerns over the handling of charitable assets and the company’s original mission.
A group of organizations, including nonprofits like LatinoProsperity and labor groups like the California Teamsters, are petitioning California Attorney General Rob Bonta to stop OpenAI from becoming a for-profit entity. OpenAI announced plans to transition to a public-benefit corporation in 2024 and reportedly has two years to complete the transition or risk a large portion of the money it has raised becoming debt.
The group’s primary concerns are that OpenAI “failed to protect its charitable assets” and is actively “subverting its charitable mission to advance safe artificial intelligence.” OpenAI started as a nonprofit research organization studying AI but transitioned to a for-profit company overseen and run by a nonprofit in 2019. This structure is legally allowed in the state of California.
The coalition’s petition claims that OpenAI’s decision to pursue a new structure is driven by a desire not to further its mission but to provide “AI’s benefits — the potential for untold profits and control over what may become powerful world-altering technologies — to a handful of corporate investors and high-level employees.” They argue that the company’s motives are centered around providing investors and high-level employees with access to potential profits and control over AI technology, rather than prioritizing its original mission.
OpenAI has responded to the allegations, stating that its Board “has been very clear that we intend to strengthen the non-profit so that it can deliver on its mission for the long term. We’re not selling it, we’re doubling down on its work.” The company also announced the creation of an advisory commission for community-based organizations, stating, “We look forward to the input and advice from leaders who have experience in community-based organizations on how we can help them achieve their missions.”
OpenAI’s primary justification for transitioning to a for-profit structure is to facilitate raising more investment capital. As a nonprofit, the company faces limitations on the financial returns it can offer investors. By becoming a for-profit entity, OpenAI would not have these limitations, nor would it have to heed the demands of a nonprofit board focused on the risks of the company’s breakthroughs rather than their utility as consumer products.
The company’s board has undergone changes that have raised concerns among the coalition. For instance, the board attempted to rein in the for-profit side over the years, such as pushing out Sam Altman in 2023, before he was rehired and the board was filled with new members more friendly to OpenAI’s for-profit goals. The organizations behind the petition believe that moves like these are enough justification for the AG to step in to protect the public’s interest.
The petition joins other attempts to block OpenAI’s conversion, including a letter from Meta to Bonta claiming that OpenAI’s transition to a for-profit would “flout the law,” and Elon Musk’s past effort to acquire the company.
