OpenAI scraps plan to become a for-profit company

In a major company restructuring overhaul, Sam Altman-led OpenAI on Monday said it is abandoning its controversial plan to become a for-profit company owing to the longstanding mounting pressure of lawsuits and critics.

CEO Altman, in an open letter to employees, said that OpenAI's non-profit parent will retain full voting control of the company, and its for-profit arm will convert into a Public Benefit Corporation (PBC). 

“We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware. We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners,” Altman said in the letter. 

He added, “PBCs have become the standard for-profit structure for other AGI labs like Anthropic and X.ai, as well as many purpose-driven companies like Patagonia. We think it makes sense for us, too.”

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The move shifts OpenAI from its capped-profit framework to a more standard equity ownership model.

Under the plan, OpenAI Global LLC, created in 2019 as a capped‑profit subsidiary, will shift to a PBC structure—a legal corporate structure in the US that allows a for-profit company to pursue both profit and a stated public mission.

The non-profit, OpenAI Inc., will appoint the PBC’s board and become a major shareholder, in an amount supported by independent financial advisors, giving the non-profit resources to support programmes so AI can benefit many different communities.

“And as the PBC grows, the nonprofit’s resources will grow, so it can do even more. We’re excited to soon get recommendations from our nonprofit commission on how we can help make sure AI benefits everyone—not just a few,” Altman said.