Dear general good:
As a California company developing generative ai technology, Meta Platforms, Inc. (“Meta”) is deeply concerned about OpenAI’s attempt to shed the nonprofit status under which it was founded to establish a purpose-driven entity. of profit. We urge you to review this proposed transaction, including the nature and timing of any transfer of assets from the OpenAI nonprofit entity to other entities. Not holding OpenAI accountable for its decision to incorporate as a nonprofit could lead to a proliferation of similar startups that are theoretically charitable until they are potentially profitable. The People of California have a direct and urgent interest in stopping this behavior. All for-profit activities of OpenAI and its related entities should be suspended to protect both investors and consumers.
In 2015, OpenAI filed its original certificate of incorporation with the state of Delaware, which states:
This Corporation shall be a nonprofit corporation organized exclusively for charitable and/or educational purposes within the meaning of section 501(c)(3) of the Internal Revenue Code of 1986, as amended, or the corresponding provision of any future law. of Internal Revenue of the United States. law. The specific purpose of this corporation is to provide funding for the research, development and distribution of technology related to artificial intelligence… The corporation is not organized for the private benefit of any person… The property of this corporation is irrevocably dedicated to (se) purposes… and no part of the net income or assets of this corporation shall ever inure to the benefit of any director, officer or member thereof or to the benefit of any private person.
OpenAI reaffirmed this commitment on its own website years later:
Seeing no clear path in the public sector, and given the success of other ambitious projects in the private industry, (OpenAI) decided to carry out this project through private means subject to strong commitments to the public good. (OpenAI) initially believed that a 501(c)(3) would be the most effective vehicle to direct the development of safe and broadly beneficial AGI without being burdened by profit incentives.
Taking advantage of this nonprofit status, OpenAI raised billions of dollars in capital from investors to further its purported mission. The company represented to the state of California and the world that it would operate without any profit motivation. Investors and the public rightfully relied on that guarantee.
Now, OpenAI wants to change its status while preserving all the benefits that allowed it to get to the point it is today. That's wrong. OpenAI should not be allowed to break the law by taking and reappropriating assets it built as a charity and using them for potentially huge private gains.
Furthermore, OpenAI's proposed conversion does not simply represent a potential future abuse of the corporate form. We also urge you to examine whether OpenAI's past practices are consistent with its obligations as a nonprofit, particularly whether it has inappropriately depleted the nonprofit's assets by distributing assets to third-party entities.
OpenAI's conduct could have seismic implications for Silicon Valley. If allowed, OpenAI's restructuring would represent a paradigm shift for tech startups; Allowing this restructuring would only prompt investors to launch nonprofit organizations, raise hundreds of millions of dollars in tax-free donations to support research and development, and then assume for-profit status as their technology becomes commercially viable.
In fact, if OpenAI's new business model is valid, non-profit investors would obtain the same advantages as those who conventionally invest in for-profit companies and, at the same time, benefit from the tax deductions granted by the government and, ultimately, the public. That would distort the market by essentially requiring any startup seeking to remain competitive to adopt the same playbook.
We understand that Elon Musk and Shivon Zilis are currently seeking to represent the public interests in Musk v. Altman, No. 4:24-cv-04722-YGR (ND Cal.). While we also urge your office to take direct action, we believe Mr. Musk and Ms. Zilis are qualified and well positioned to represent the interests of Californians in this matter. Their initial and founding roles in the creation and operations of OpenAI and as past members of its Board position them to understand better than anyone what OpenAI was intended to be and how its current conduct deviates from its charitable mission.
Meta is committed to openness and transparency in the transformative field of ai. OpenAI's charitable promise to develop safe and widely beneficial ai, free from commercial pressures, is important and must be kept. Given the breakneck speed at which OpenAI continues its for-profit conversion, this is a special case where action is urgently needed.
We appreciate your consideration of our views and will be happy to answer any questions you may have.
Respectfully,
Metaplatforms
