OpenAI, the company that brought you ChatGPT, just sold you out.

 

Since its founding in 2015, its leaders have said their top priority is making sure artificial intelligence is developed safely and beneficially.

They've touted the company's unusual corporate structure as a way of proving the purity of its motives.

OpenAI was a nonprofit controlled not by its CEO or by its shareholders, but by a board with a single mission:

keep humanity safe...

But this week, the news broke that OpenAI will no longer be controlled by the nonprofit board. OpenAI is turning into a full-fledged for-profit benefit corporation.

 

Oh, and CEO Sam Altman, who had previously emphasized that he didn't have any equity in the company, will now get equity worth billions, in addition to ultimate control over OpenAI.

 

In an announcement that hardly seems coincidental, chief technology officer Mira Murati said shortly before that news broke that she was leaving the company.

 

Employees were so blindsided that many of them reportedly reacted to her abrupt departure with a "WTF" emoji in Slack.

WTF indeed...

The whole point of OpenAI was to be nonprofit and safety-first.

 

It began sliding away from that vision years ago when, in 2019, OpenAI created a for-profit arm so it could rake in the kind of huge investments it needed from Microsoft as the costs of building advanced AI scaled up.

 

But some of its employees and outside admirers still held out hope that the company would stick to its principles.

 

That hope can now be put to bed.

And if this week's news is the final death knell for OpenAI's lofty founding vision, it's clear who killed it.

 

 

 

 

When OpenAI was cofounded in 2015 by Elon Musk (along with Altman and others), who was worried that AI could pose an existential risk to humanity, the budding research lab introduced itself to the world with these three sentences:

OpenAI is a nonprofit artificial intelligence research company.

 

Our goal is to advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return.

 

Since our research is free from financial obligations, we can better focus on a positive human impact.

All of that is objectively false now...

 

Since Altman took the helm of OpenAI in 2019, the company has been drifting from its mission.

 

That year, the company - meaning the original nonprofit - created a for-profit subsidiary so it could pull in the huge investments needed to build cutting-edge AI.

 

But it did something unprecedented in Silicon Valley:

It capped how much profit investors could make.

They could get up to 100 times what they put in, but beyond that, the money would go to the nonprofit, which would use it to benefit the public.

 

For example, it could fund a universal basic income program to help people adjust to automation-induced joblessness.

 

Over the next few years, OpenAI increasingly deprioritized its focus on safety as it rushed to commercialize products. By 2023, the nonprofit board had grown so suspicious of Altman that it tried to oust him.

 

But he quickly clawed his way back to power, exploiting his relationship with Microsoft, with a new board stacked in his favor. And earlier this year, OpenAI's safety team imploded as staffers lost faith in Altman and quit the company.

 

Now, Altman has taken the final step in consolidating his power:

He's stripped the board of its control entirely.

Although it will still exist, it won't have any teeth.

"It seems to me the original nonprofit has been disempowered and had its mission reinterpreted to be fully aligned with profit," Wu said.

Profit may be what Altman feels the company desperately needs.

 

Despite a supremely confident blog post published this week, in which he claimed that AI would help with,

"fixing the climate, establishing a space colony, and the discovery of all of physics," OpenAI is actually in a jam.

It's been struggling to find a clear route to financial success for its models, which cost hundreds of millions - if not billions - to build.

 

Restructuring the business into a for-profit could help attract investors.

 

But the move has some observers ­ including Musk himself - asking:

How could this possibly be legal...?

If OpenAI does away with the profit cap, it would be redirecting a huge amount of money - prospective billions of dollars in the future - from the nonprofit to investors.

 

Because the nonprofit is there to represent the public, this would effectively mean shifting billions away from people like you and me.

 

As some are noting, it feels a lot like theft.

"If OpenAI were to retroactively remove profit caps from investments, this would in effect transfer billions in value from a non-profit to for-profit investors," Jacob Hilton, a former employee of OpenAI who joined before it transitioned from a nonprofit to a capped-profit structure.

 

"Unless the non-profit were appropriately compensated, this would be a money grab.

 

In my view, such a thing would be incompatible with OpenAI's charter, which states that OpenAI's primary fiduciary duty is to humanity, and I do not understand how the law could permit it."

But because OpenAI's structure is so unprecedented, the legality of such a shift might seem confusing to some. And that may be exactly what the company is counting on.

 

Asked to comment on this, OpenAI said only to refer to its statement in Bloomberg.

 

There, a company spokesperson said OpenAI remains,

"focused on building AI that benefits everyone," adding that "the nonprofit is core to our mission and will continue to exist."

Advocates for AI safety have been arguing that we need to pass regulation that would provide some oversight of big AI companies - like California's SB 1047 bill, which Gov. Gavin Newsom must either sign into law or veto in the next few days.

 

Now, Altman has neatly made their case for them.

"The general public and regulators should be aware that by default, AI companies will be incentivized to disregard some of the costs and risks of AI deployment - and there's a chance those risks will be enormous," Wu said.

Altman is also validating the concerns of his ex-employees who published a proposal demanding that employees at major AI companies be allowed a "right to warn" about advanced AI.

 

Per the proposal:

"AI companies have strong financial incentives to avoid effective oversight, and we do not believe bespoke structures of corporate governance are sufficient to change this."

Obviously, they were right:

OpenAI's nonprofit was meant to reign over the for-profit arm, but Altman just flipped that structure upside down.