Sam Altman told OpenAI staff members during their weekly meeting that the company will be changing its rather complicated nonprofit corporate structure next year, according to FortuneThe CEO said OpenAI will no longer be controlled by a nonprofit entity and become a more traditional for-profit organization. He did not elaborate on the details of how the company will achieve that goal or what exactly OpenAI's corporate structure will look like. A spokesperson said only Fortune that it remains “focused on building ai that benefits everyone” and that the nonprofit is “core to (its) mission and will continue to exist.”
OpenAI started as a nonprofit in 2015 that relied on donor money. On a page explaining its structureIt said it raised only $130.5 million in total donations over the years, which it says made clear that “donations alone would not be sufficient to cover the cost of the computing power and talent needed to drive (its) core research.” The organization, which was purely nonprofit at the time, created a for-profit subsidiary to solve that problem. Fortune As he explains, OpenAI's nonprofit entity currently controls its for-profit arm, which in turn controls a holding company that receives investments from companies like Microsoft.
Under this structure, there is a cap on the profits that can be allocated to investors, including Microsoft. Anything OpenAI earns above that cap goes to its nonprofit division. And the company's revenue is booming, according to a report by The information Published in June, OpenAI reportedly doubled its annualized revenue in the first half of the year, thanks to the subscription version of ChatGPT.
The company's complex structure also allowed the board of directors of OpenAI, a nonprofit, to oust Altman in 2023, because they “no longer had confidence in his ability to continue leading OpenAI.” However, five days later, the board was dissolved and replaced, while Altman was reinstated as CEO.
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