OpenAI said on Tuesday it had completed its recapitalization, spinning off the AI lab into a for-profit corporation housed within a nonprofit foundation. It is the end result of a complex legal process that its former co-founder, Elon Musk, had vigorously resisted.
Under the new structure, the nonprofit OpenAI Foundation will have legal control over a public benefit corporation called OpenAI Group, which is free to raise funds or acquire companies without legal restrictions. The Foundation will have a significant stake in OpenAI Group and will appoint its board of directors.
“We believe that the world’s most powerful technology should be developed in a way that reflects the world’s collective interests,” OpenAI president Brett Taylor wrote in a blog post. “The closing of our recapitalization gives us the ability to continue pushing the frontier of AI and an updated corporate structure to ensure progress serves everyone.”
Under the new structureThe OpenAI Foundation will own 26% of the for-profit company, with a guarantee for additional shares to be awarded if the company continues to grow. Microsoft, an early investor in OpenAI, will have approximately a 27% stake, valued at around $135 billion, with the remaining 47% held by investors and employees.
According a separate blog post from MicrosoftThe agreement will also extend Microsoft’s intellectual property rights to OpenAI models until 2032. If OpenAI ever declares that it has achieved its long-standing goal of artificial general intelligence, the agreement will also require it to be presented to a panel of independent experts for verification.
Prior to this recapitalization, OpenAI operated as a nonprofit under strict capital restrictions, a position that became increasingly untenable as the company’s fundraising became more ambitious. In April, Softbank announced an unprecedented $30 billion investment in OpenAIdepending on the successful conversion of the company into a for-profit company. On Saturday, The information reported that the last tranche of financing had been sent, indicating possible progress in the restructuring.
There have been a number of legal efforts to block or otherwise influence the restructuring, most notably by Elon Musk, who at one point offered to acquire the company for $97.4 billion. The state attorneys general of California and Delaware also made inquiries into the process, and Taylor specifically cited them as a positive influence on the discussions.
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“We made several changes as a result of those discussions and believe OpenAI (and, as a result, the public we serve) is better for them,” Taylor wrote.
Following the news, CEO Sam Altman announced an open live broadcast with chief scientist Jakub Pachocki to answer questions from the public. The event will begin at 10:30 am Pacific Time.
