TechFlow news, October 12 — According to Fortune, as OpenAI's valuation soars to $157 billion, its unique hybrid structure combining nonprofit and for-profit elements is facing serious challenges. Experts believe OpenAI may have reached or even exceeded the limits of its current corporate structure, potentially leading to a costly and complex restructuring. OpenAI currently operates as a nonprofit organization with a mission to develop artificial intelligence for the benefit of "all humanity," while also controlling a for-profit subsidiary. UCLA law professor Jill Horwitz emphasizes that when conflicts arise between nonprofit and for-profit divisions, charitable purposes must take precedence.
If the nonprofit loses control over its subsidiary, OpenAI might be required to pay fair market value for benefits and assets originally belonging to the nonprofit. This would involve complex asset valuations, including intellectual property, patents, commercial products, and licenses. Experts anticipate OpenAI could face rigorous scrutiny from the IRS, as well as the attorneys general of Delaware and California.
OpenAI CEO Sam Altman recently confirmed the company is considering restructuring, possibly transitioning into a public benefit corporation, though specific details have not been disclosed. OpenAI board chair Bret Taylor stated the board remains focused on fulfilling its fiduciary responsibilities, and any potential restructuring will ensure the nonprofit continues to exist and thrive. However, some observers, including former board member Elon Musk, have expressed skepticism about whether OpenAI remains faithful to its original mission.
