Group Challenges OpenAI's Move Away from Nonprofit Foundations

A group of experts, including some former employees of OpenAI, have expressed strong disapproval regarding the company's transition from its nonprofit foundations.

In an open letter addressed to the Attorneys General of California and Delaware, the diverse group  made up of legal authorities, corporate governance specialists, AI scientists, and nonprofit representatives  claims that the anticipated modifications imperil OpenAI's foundational charitable mission.

Founded with a distinctive structure, OpenAI was created with the goal outlined in its Articles of Incorporation to ensure artificial general intelligence serves all of humanity, not individual private interests.

The letter criticizes plans to transition the current for-profit subsidiary governed by OpenAI-nonprofit into a Delaware public benefit corporation, arguing it would dismantle key governance protections.

This change, the experts suggest, could shift the control over the development and implementation of potentially impactful Artificial General Intelligence, or AGI, from a charity aimed at benefiting humanity to a profit-driven entity accountable to its shareholders.

According to OpenAI, AGI refers to systems capable of outperforming humans in most economically significant tasks. While acknowledging AGI's potential to enhance humanity, OpenAI leaders have also highlighted risks of misuse, severe accidents, and social disruption.

Co-founder Sam Altman and others have equated efforts to mitigate AGI risks with preventing global dangers like pandemics and nuclear conflicts.

The founders, including Altman, Elon Musk, and Greg Brockman, were originally concerned about AGI's development under solely commercial firms such as Google, thus founding OpenAI as a nonprofit entity free from the obligation to generate a financial return. Altman once stated in 2017 that they wanted their accountability to be towards humanity as a whole.

Despite launching a 'capped-profit' subsidiary in 2019 to secure needed investments, OpenAI emphasized that the nonprofit parent would retain authority and that their mission was paramount. Key safeguards accompanied this move.

Altman asserted in a 2023 Congressional testimony that their "atypical structure" ensured focus on their long-term goals.

The critics warn that converting to a Public Benefit Corporation could undermine these protections.

OpenAI has acknowledged pressures from competing to attract investments and talent, given rivals' conventional equity models, as motivation for the change.

The letter rebuffs, however, stating that competitive advantage does not align with OpenAI's charitable objectives and that its unique nonprofit model was crafted to bear certain competitive costs in favor of safety and public welfare.

The letter argues, "Abandoning governance protections that assure OpenAI stays true to its mission for competitive benefit does not advance the mission itself."

The authors challenge the necessity of OpenAI departing from nonprofit governance simply to simplify its capital structure, arguing the core issue revolves around prioritizing investor interests over the mission. They highlight that although the nonprofit board may take investor interests into account if it aligns with the mission, the restructuring seems intended to make these interests dominant, potentially at the mission's expense.

Many of these criticisms have also been reflected in Elon Musk's legal proceedings against OpenAI. Earlier this month, OpenAI reportedly counter-sued Musk, accusing him of orchestrating a "relentless" and "malicious" campaign to "undermine OpenAI" post his departure from the organization, having founded a competing AI firm, xAI.

The letter’s authors are calling for intervention and demand that OpenAI clarify how restructuring aligns with its mission, and why once critical safeguards are now considered barriers.

Furthermore, the signatories call for a pause on restructuring, maintaining nonprofit oversight and other protections, and ensuring board independence to manage practices in line with charitable goals.

The letter concludes that the proposed restructuring would remove vital safeguards, effectively transferring control and profits of potentially the most significant technology yet to a for-profit corporation, legally obliged to prioritize shareholder returns.