OpenAI is reversing a controversial shift toward becoming a fully for-profit company, saying its founding nonprofit will remain in charge of the AI powerhouse behind ChatGPT.
The announcement follows months of mounting criticism about OpenAI’s possible for-profit pivot from former employees, AI experts, and co-founder Elon Musk.
In a statement, board chair Bret Taylor reaffirmed the nonprofit’s authority: “OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit.”
This decision marks a sharp reversal of earlier efforts to restructure OpenAI into a more traditional corporate entity. OpenAI will now adopt a public benefit corporation, or a PBC model — similar to structures used by rivals such as Anthropic and xAI — while preserving full oversight under the original nonprofit. The goal is to attract investments while upholding the organization’s mission to develop safe and beneficial artificial intelligence.
CEO Sam Altman framed the move as a progress. In a letter to employees, he wrote: “OpenAI is not a normal company and never will be. We are committed to this path of democratic AI. We want to put incredible tools in the hands of everyone.”
The announcement comes as OpenAI faces serious scrutiny, including legal oversight. The attorneys general of California and Delaware — where OpenAI is incorporated — are reviewing the restructuring. A spokesperson for the California AG’s office told The Washington Post, “This remains an ongoing matter, and we are in continued conversations with OpenAI.”
Microsoft pushes back, and Musk’s attorney calls it a ‘transparent dodge’
Despite the shift, OpenAI still has not secured approval from Microsoft, its largest financial backer. Microsoft has poured $13.75 billion into the startup and is reportedly pushing for stronger protections for its investment before agreeing to the restructuring.
Microsoft declined to comment, but OpenAI said in a statement to Bloomberg, “We continue to work closely with Microsoft, and look forward to finalizing the details of this recapitalization in the near future.”
Sources told Bloomberg that Microsoft is still negotiating terms, including its equity stake and revenue-sharing agreements. Without Microsoft’s sign-off, the proposed structure could face delays.
Meanwhile, Musk — who co-founded OpenAI but left in 2018 — continues his legal fight. His attorney, Marc Toberoff, criticized the revised structure Monday, telling Bloomberg, “OpenAI’s announcement is a transparent dodge that fails to address the core issues: charitable assets have been and still will be transferred for the benefit of private persons, including Altman, his investors and Microsoft.” He added, “The founding mission remains betrayed.”
OpenAI said Musk’s lawsuit is a bad-faith attempt to stall the company’s progress and boost his rival startup, xAI. A spokesperson told Bloomberg, “Elon continuing with his baseless lawsuit only proves that it was always a bad-faith attempt to slow us down.”
Where OpenAI goes from here
Despite the legal and investor drama, Altman insists the new PBC model under nonprofit control is the best way to keep OpenAI aligned with its values while securing the funding needed for future AI breakthroughs.
Altman acknowledged that building and distributing powerful AI will require “hundreds of billions of dollars” and possibly trillions. “We believe this is the best way for us to fulfill our mission and to get people to create massive benefits for each other with these new tools,” he told staff.
The revamped structure does make one major change: It eliminates OpenAI’s complex “capped-profit” model, which had limited investor returns to preserve nonprofit ideals. Now, under the PBC model, the company can offer traditional equity, attracting bigger investors like SoftBank, which recently pledged a $30 billion investment, contingent on structural changes.