OpenAI Abandons Plan to Transition to a For-Profit Company
OpenAI announced on May 5, U.S. time, that it will abandon its plan to transform into a for-profit company and will return to its original non-profit operational model.
In the future, OpenAI’s non-profit organization will regain complete control over all of the company’s operations and business activities.
According to an official statement, the non-profit organization will continue to oversee OpenAI while converting its current for-profit division into a Public Benefit Corporation (PBC). This move follows discussions with the offices of the Attorneys General of California and Delaware, highlighting the importance of legal considerations, public pressure, and commitment to mission in shaping the company’s future direction.
Elon Musk’s Lawsuit Against OpenAI
As one of the founders of OpenAI, Elon Musk filed a lawsuit last year seeking to prevent OpenAI from becoming a for-profit company. Although the request for an injunction was dismissed in March this year, some parts of the lawsuit are still ongoing, during which Musk even offered $97.4 billion to acquire OpenAI. This has led the industry to closely watch OpenAI’s latest statement, pondering whether there has been a resolution in the months-long standoff between Musk and OpenAI CEO Sam Altman.
Altman: OpenAI’s Future Will Remain Non-Profit
According to OpenAI’s official statement, the company will undergo a structural reorganization, allowing the non-profit organization “OpenAI Inc.” to become the sole controller of the company’s assets and business. The previously established for-profit subsidiary “OpenAI Global LLC” will transition to a Public Benefit Corporation (PBC), and will be fully controlled by OpenAI Inc., changing the dual-structure model that has been in place for the past few years.
Altman stated in the announcement that after careful consideration, the decision was made to return OpenAI to its original mission and structure, “OpenAI was originally a non-profit organization, and will remain a non-profit organization overseeing and controlling for-profit organizations. This will not change.”
OpenAI was founded in December 2015 by Altman, Musk, Ilya Sutskever, and Greg Brockman as a non-profit organization, with the explicit goal of “ensuring that artificial general intelligence (AGI) benefits all of humanity.” Initially, the founders believed that a non-profit 501(c)(3) structure was the most effective vehicle for developing safe and beneficial AGI, free from profit motives.
However, as the funding needs for AI research continued to grow, OpenAI made a significant structural adjustment in 2019, introducing a “capped-profit” model. This hybrid structure allowed OpenAI to establish for-profit subsidiaries to attract investment while maintaining control as a non-profit organization, ensuring that the company still prioritized its mission over profit maximization.
As of now, Microsoft has invested $13.75 billion in OpenAI, making it the largest investor. At the beginning of 2024, OpenAI was valued at $80 billion in a new round of funding and amended its corporate charter to provide greater autonomy for its for-profit operations. Yet, just over a year later, the company announced a return to a non-profit governance model. The question remains: why did OpenAI encounter obstacles in its transition to for-profit?
Legal and Regulatory Pressures as Major Factors
The primary reason for OpenAI’s abandonment of its full profit-making plan is significant pressure from legal and regulatory bodies. In a statement from May 2025, OpenAI board members Bret Taylor and Altman both confirmed that this decision was made “after hearing from civic leaders and discussing with the offices of the Attorneys General of California and Delaware.”
According to non-profit law, charitable organizations cannot arbitrarily change their overall purpose, especially in relation to assets already committed to that purpose. Any significant change requires court authorization, and the relevant state Attorneys General must be included as “necessary parties.” This legal framework could pose a substantial obstacle because:
According to the cy pres principle, a charitable organization can only change its purpose when fulfilling its objectives becomes illegal, impossible, impractical, or wasteful; this is quite a high threshold. If there is reason to change the purpose, the charitable organization’s assets must be used for charitable purposes that are reasonably close to the original purpose of the charity.
OpenAI’s original mission “to ensure AGI benefits all of humanity” is at the core of its organizational identity. A complete transition to a for-profit structure could jeopardize this mission, as it would place profit motives above the public interest. According to non-profit tax attorney Rose Chan Loui, any structural change must allow “the non-profit organization to maintain control over technological development,” especially considering OpenAI’s foundational purpose of ensuring AGI’s development proceeds safely and beneficially.
In summary, OpenAI’s decision to abandon its transition to a for-profit company can be attributed to the following three points:
- A public letter from former OpenAI employees and AI researchers urging the Attorneys General of California and Delaware to investigate whether the structural changes comply with non-profit obligations.
- Musk’s high-profile lawsuit accusing the company of deviating from its founding mission.
- The California Alliance of Nonprofits calling for an investigation, questioning whether OpenAI’s proposed new business structure would fulfill its charitable mission.
These external pressures collectively formed a powerful force prompting OpenAI to reassess its purely profit-oriented plans.
Stalemate! Altman Cannot Decide Against Profitability
“OpenAI’s statement is a clear evasion, failing to address the core issue: charitable assets have already and will continue to be transferred to benefit individuals, including Altman, his investors, and Microsoft,” stated Marc Toberoff, the lead attorney responsible for Musk’s lawsuit against OpenAI. He added that OpenAI’s new decision “does not bring about any change,” indicating that Musk’s lawsuit against OpenAI will continue.
Furthermore, Microsoft, the largest investor and also a partner, will be a significant factor in determining whether OpenAI’s restructuring is successful. According to Bloomberg reports, informed sources indicated that Microsoft wants to ensure that any structural changes at OpenAI adequately protect its investment and is currently actively negotiating details of OpenAI’s proposals.
Altman also mentioned that OpenAI is still communicating with civic organizations, prosecutorial bodies, and Microsoft, stating, “We look forward to continuing dialogue with them, Microsoft, and our newly appointed non-profit organizational commissioner to advance the details of the plan.”
This article is republished in collaboration with: Digital Times
Further Reading: OpenAI Takes Action! Plans to Spend $3 Billion to Acquire Windsurf: Competing with Claude and Cursor, Entering the Vibe Coding Field
Sources: OpenAI, Reuters, The New York Times, Bloomberg
Editor: Li Xiantai