When OpenAI was started in 2015, its founders (including both Sam Altman and Elon Musk) chose to make it a nonprofit. Its initial goal was to guarantee that artificial general intelligence (AGI), a type of AI that is theoretically better at humans at most tasks, would benefit everyone.
The company has gone through a number of changes in the years since. It hasn’t been a true nonprofit since 2019, when it moved to a “capped-profit” structure, which limited profits to 100 times any investment. Musk even sued the company last year, claiming it had ditched its original mission in favor of profits. But now, OpenAI is looking more like a traditional for-profit company than ever. On Thursday, it announced the company will now operate under a new for-profit structure, called OpenAI Group PCB, a public benefit corporation. OpenAI’s nonprofit arm, which is now called the OpenAI Foundation, holds a $130 billion stake in OpenAI Group PCB, and controls the for-profit company.
OpenAI says it is particularly focused on how this move will affect its goals of achieving AGI, and ensuring that AGI “benefits all of humanity.” As OpenAI sees it, the better its for-profit businesses perform, the more funds the OpenAI Foundation will have to continue its philanthropic work.
To that point, OpenAI says the OpenAI Foundation is committing $25 billion to two key objectives. The first is to health and disease, as the OpenAI Foundation will aim to create open-sourced health datasets and offer funding for scientists. The second goal will be to bolster “AI resilience,” which OpenAI sees as “maximizing AI’s benefits and minimizing its risks.”
According to OpenAI, the OpenAI Foundation and OpenAI Group both have the same mission, and that the terms of the new structure require the for-profit side to advance that mission.
What does this mean for OpenAI?
The way OpenAI puts it, this move is the best of both worlds for the company. It asserts that it will continue to operate with the same values and goals as it did prior to this restructuring, while at the same time having more freedom to raise capital to fund those efforts.
That second point is certainly true. CEO Sam Altman has been working for nearly two years to restructure the company into something that can more easily compete financially with other for-profit companies in the AI space, like Amazon, Google, and Meta. Other strictly-AI companies, like Anthropic and xAI, also have this type of structure.
Already, the move has solidified funds for OpenAI: The Japanese-baed SoftBank had previously pledged to a $40 billion investment, with $10 billion in April and another $30 billion in December. However, that investment was contingent on the company’s restructuring plans. Had OpenAI not restructured, SoftBank would’ve dropped its investment to $20 billion. By bolstering its for-profit core, OpenAI earned itself that extra $20 billion.
OpenAI has also agreed to extend an agreement with Microsoft that allows the latter to use and sell OpenAI products. The original agreement ran through 2030, and allowed OpenAI to cancel the deal if the company achieved AGI. But now, the deal runs through 2032, even if OpenAI achieves AGI, so long as the tech has the “appropriate safety guardrails.” An independent expert panel will make the call on whether OpenAI has achieved AGI. Rights to OpenAI’s research will still be capped when OpenAI achieves AGI, or by 2030, whichever comes first.
It’s no secret that AI is big business, so this move could realistically continue OpenAI’s many financial successes. It may also heat up the race to achieve AGI, as it now allows Microsoft to pursue that benchmark with OpenAI’s technologies as well. But against this news is a lingering, and concerning, question: Are we in an AI bubble? And will that bubble burst? OpenAI currently has $1 trillion in AI deals, though only pulls in $13 billion in actual revenue. Perhaps its restructuring will allow it to develop more lucrative revenue streams, but even still, AI is generating a lot of investment without the tangible returns you’d necessarily expect.
Original Source: https://lifehacker.com/tech/openai-will-now-operate-like-a-for-profit-company?utm_medium=RSS
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