This move comes amid a wave of executive resignations and increasing concerns about the safety and ethical development of AI. Mira Murati, OpenAI’s chief technology officer (CTO), resigned this week, following the departures of other key executives over recent months. Murati, a highly visible figure in OpenAI's leadership, temporarily replaced CEO Sam Altman in November 2023, when he was briefly ousted by the company’s non-profit board. Her exit, along with others, has added to the perception that OpenAI is undergoing significant internal changes. 

The Planned Restructuring 

According to recent reports, OpenAI plans to transition into a for-profit benefit corporation. Unlike its current capped-profit structure—where investors receive limited returns and excess profits are reinvested into the company—this change will eliminate profit limits. This shift is designed to attract more investors, as the company seeks an additional $6.5 billion in funding. 

The restructuring allows OpenAI to compete with other AI developers like Anthropic, which already operates as a public benefit corporation. While OpenAI’s non-profit entity will continue to exist, it will no longer have control over the company’s for-profit activities. The non-profit will still own shares in the new for-profit venture, but the change will significantly alter how the company operates, especially in terms of financial growth and control. 

Why Is OpenAI Making This Change? 

The AI industry is advancing at a rapid pace, with OpenAI and competitors like Google, Meta, and Microsoft leading the charge. OpenAI's ChatGPT, which launched in late 2022, is credited with sparking the current AI boom. However, maintaining and advancing AI technologies is costly. OpenAI's operational expenses are skyrocketing, and the company faces potential losses of up to $5 billion by the end of 2024. 

The decision to become a for-profit business is largely driven by the need for substantial investment. While OpenAI has already received multi-billion-dollar backing from Microsoft, the company is in talks with other major players, including Apple and Nvidia, to secure additional funding. Transitioning to a profit-focused structure, without caps on returns, will make OpenAI more appealing to these investors. 

The Implications 

OpenAI’s shift to a for-profit structure has broader implications for the tech industry and society. When OpenAI was founded, its mission was centered on ensuring the development of AGI that would benefit humanity, not just generate profits. AGI, an advanced form of AI that is smarter than humans across the board, has long been a controversial concept. Many experts, including Elon Musk and academic Max Tegmark, have warned about the potential dangers of AGI if developed irresponsibly. 

By focusing on profit, critics fear that OpenAI may cut corners when it comes to the safety and ethical considerations of AGI. Former employees have expressed concerns about the company’s ability to responsibly manage the risks associated with developing AGI. William Saunders, a former safety researcher at OpenAI, testified to the U.S. Senate that he had “lost faith” in the company’s leadership to make responsible decisions about AGI. This comes at a time when many in the AI community worry that the race to create the most powerful AI tools is happening at the expense of safety measures. 

OpenAI, however, insists that it is prioritizing safety. The company recently announced the formation of an independent safety and security committee to oversee its operations. Altman, OpenAI's CEO, has reiterated that "safety at every step" remains a core principle, even as the company pivots toward a more traditional business structure. 

The Departure of Key Executives 

One of the more puzzling aspects of OpenAI’s current situation is the recent spate of high-level departures. Mira Murati’s exit follows that of other influential figures, such as co-founder and chief scientist Ilya Sutskever, who also played a key role in the November 2023 events when Altman was briefly ousted by the board. 

Murati was seen as a steadying influence during last year’s leadership crisis, so her decision to leave has raised eyebrows. In her departure statement, Murati said she wanted “space to do my own exploration,” suggesting her exit was voluntary and not related to the company’s restructuring. However, her departure adds to the growing list of senior executives who have exited OpenAI in the past year, raising questions about internal stability and direction. 

What’s Next for OpenAI? 

As OpenAI transitions to a new financial structure, it is likely to see increased scrutiny from regulators, investors, and the public. The company remains one of the most influential in the world of AI, thanks in large part to ChatGPT, which has been integrated into a wide range of applications from education to customer service. 

However, with AGI still on the horizon, many are watching closely to see how OpenAI handles the ethical, safety, and societal challenges that come with developing increasingly powerful AI systems. The move to a for-profit model could accelerate innovation, but it also raises important questions about the responsibility tech companies bear as they push the boundaries of what AI can do. 

Conclusion 

OpenAI’s decision to become a for-profit entity marks a significant shift in the company’s trajectory. While the move is designed to secure the investment needed to advance its groundbreaking AI technologies, it also raises concerns about the prioritization of profits over safety. As the company continues to push the envelope on AI development, it must strike a careful balance between innovation and ethical responsibility, ensuring that its work benefits humanity, not just its shareholders. 

SOURCE: Why is OpenAI planning to become a for-profit business and does it matter?