OpenAI restructures as public benefit corporation, ditches plan on for-profit control

OpenAI recently closed a $40 billion funding round led by SoftBank, valuing the company at $300 billion [File]
| Photo Credit: AP

OpenAI on Monday (May 5, 2025) said it is restructuring as a public benefit corporation (PBC), reaffirming its founding mission by allowing the nonprofit organisation that oversees it to retain control. The move marks a significant reversal from previous plans to shift authority to investors and signals a renewed commitment to prioritising public benefit over profit.

The nonprofit, which has always maintained a controlling stake in OpenAI through an unconventional hybrid structure, will now become the largest shareholder in the new corporate entity. It will also retain the authority to appoint board members, a key element that ensures continued alignment with OpenAI’s broader social and ethical goals.

Sam Altman, OpenAI’s CEO, co-founded the organisation in 2015 with the goal of developing artificial intelligence in a safe and broadly beneficial way. Initially launched as a nonprofit alongside tech multi-billionaire Elon Musk, OpenAI shifted in 2018 to a “capped-profit” structure to attract the immense funding required to advance artificial general intelligence (AGI) research. That pivot allowed billions in outside investment while still preserving some nonprofit oversight. But as the company’s ambitions and financial stakes grew, tensions rose over whether its original mission was being diluted.

In recent years, Mr. Altman and OpenAI explored transferring more control to investors in order to streamline operations and appeal to financial backers. However, pushback from critics, including Mr. Musk, who has accused the company of abandoning its original safety-first ideals, helped spur a reevaluation. “I am very happy we made the decision for the nonprofit to maintain control,” Mr Altman said in a statement, adding that the updated structure creates “a more understandable foundation for doing what a company like ours has to do.”

A public benefit corporation is a for-profit entity that also commits to a public mission, allowing it to attract traditional investment while being legally obligated to consider social impact. OpenAI’s transition to this model comes as it continues negotiations around the nonprofit’s equity stake and the governance structure of the new entity.

The timing is critical. OpenAI recently closed a $40 billion funding round led by SoftBank, valuing the company at $300 billion. Sources familiar with the deal say that if the restructuring isn’t finalized by year’s end, SoftBank could cut its investment in half.

In a statement reflecting on OpenAI’s journey, Mr. Altman acknowledged the company’s humble beginnings and evolving understanding of AI’s potential. “We started around a kitchen table without a clear plan,” he wrote. “We didn’t know how AGI would be built or used.” What began as a speculative research initiative has since evolved into a global platform shaping education, medicine, productivity, and more.

Mr. Altman emphasised that OpenAI’s long-term vision is to democratise access to powerful AI tools, placing them in the hands of individuals—not just governments or corporations. “We want to open source very capable models,” he said. “We trust humanity, and think the good will outweigh the bad by orders of magnitude.”

By recommitting to nonprofit control and adopting the PBC model, OpenAI aims to thread the needle between scalability and responsibility—advancing AGI in a way that benefits society at large.