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After nearly a year of negotiations with Microsoft and the attorneys general of California and Delaware, OpenAI has successfully reorganized its corporate structure. OpenAI says that its nonprofit entity, now called the OpenAI Foundation, wields a controlling stake in OpenAI’s for-profit arm, which is now a public benefit corporation called OpenAI Group.
Essentially, this move splits OpenAI into two separate organizations, with the nonprofit OpenAI Foundation being responsible for overseeing and governing the for-profit OpenAI Group PBC.
The announcement is a major victory for OpenAI CEO Sam Altman, who has been working to eliminate the capped-profit structure that the company originally adopted in 2019. Under that structure, investors got a capped return on their investment, but any additional revenue would be owned by the nonprofit. With the new structure, investors will no longer have limits on the returns they can receive for their investments; it will also make it easier for the company to eventually go public. According to Reuters, Altman is not getting any ownership stake in the newly restructured OpenAI.
In a blog post announcing the news, the company wrote that the OpenAI Foundation’s stake in OpenAI Group is currently valued at roughly $130 billion, around 26 percent of the total company. The Foundation will be granted additional ownership if the Group’s share price increases significantly after 15 years.
Through the foundation, OpenAI says it will pursue philanthropic initiatives aimed at ensuring that artificial general intelligence (AGI), defined by OpenAI as “highly autonomous systems that outperform humans at most economically valuable work,” benefits all of humanity. The foundation will start this work with a $25 billion commitment to fund work related to AI-powered health science research and new security measures to minimize AI’s risks while maximizing its benefits.
To achieve this restructuring, Altman needed to renegotiate the terms of OpenAI’s agreement with Microsoft, its largest investor. In a joint statement, the companies said that Microsoft now owns roughly 27 percent of OpenAI Group, valued at roughly $135 billion, slightly more than the OpenAI Foundation.
Previously, the deal gave Microsoft full access to OpenAI’s tech until OpenAI declares that it has achieved AGI, but under the new terms, any AGI claims made by OpenAI will be verified by an independent expert panel.
In addition, the new Microsoft deal stipulates that the company will not have any IP rights to any consumer hardware that OpenAI releases in the future, and that OpenAI can now jointly develop “some products” with third parties, although API-based products will continue to be exclusive to Microsoft’s Azure platform.
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Ben Sherry
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