OpenAI Wants to Go For-Profit. Experts Say Regulators Should Step In

In the latest development in an ongoing struggle over OpenAI’s future direction—and potentially the future of artificial intelligence itself—dozens of prominent figures are urging the Attorneys General of California and Delaware to block OpenAI’s controversial plan to convert from its unique nonprofit-controlled structure to a for-profit company. 

In a letter made public April 23, signatories including “AI Godfather” Geoffrey Hinton, Harvard legal professor Lawrence Lessig, and several former OpenAI researchers argue the move represents a fundamental betrayal of OpenAI’s founding mission. 

“The proposed restructuring would eliminate essential safeguards, effectively handing control of, and profits from, what could be the most powerful technology ever created to a for-profit entity with legal duties to prioritize shareholder returns,” the letter’s authors write. It lands as OpenAI faces immense pressure from the other side: failing to implement the restructure by the end of the year could cost the company $20 billion and hamstring future fundraising.

OpenAI was founded in 2015 as a non-profit, with its stated mission being to ensure that artificial general intelligence (AGI) “benefits all of humanity” rather than advancing “the private gain of any person.” AGI, which OpenAI defines as systems outperforming humans at most economically valuable work, was seen as potentially world-changing but also carrying clear risks, especially if controlled solely by a for-profit company. By 2019, believing they’d need to attract outside investment to build AGI, OpenAI’s leadership created a “capped-profit” subsidiary controlled by the original nonprofit—a hybrid that has allowed the firm to take on over $60 billion in capital over the years to become one of the most valuable startups in history. CEO Sam Altman himself testified to Congress in 2023 that this structure “ensures it remains focused on [its] long-term mission.”

Then, in December, OpenAI proposed dismantling that unique arrangement, morphing its capped-profit arm into a public benefit corporation, which would take control of OpenAI’s operations and business. The original nonprofit, while relinquishing direct control, would become—through owning a significant equity in the new company—a massively endowed foundation; it would hire its own leadership to fund and pursue separate charitable work in fields such as science and education. OpenAI says the new arrangement would enable them to “raise the necessary capital with conventional terms like others in this space.” Indeed, the need for such terms appears already baked into recent deals: investors from OpenAI’s most recent $40 billion fundraising round, finalized in March, can withdraw half that amount if OpenAI doesn’t restructure by the end of this year.

“Our Board has been very clear: our nonprofit will be strengthened and any changes to our existing structure would be in service of ensuring the broader public can benefit from AI. Our for-profit will be a public benefit corporation, similar to several other AI labs like Anthropic – where some of these former employees now work – and xAI, except that they do not support a nonprofit,” an OpenAI spokesperson told TIME via email. “This structure will continue to ensure that as the for-profit succeeds and grows, so too does the nonprofit, enabling us to achieve the mission.”

Under the restructure, board members would still legally have to consider OpenAI’s founding mission—albeit it would be downgraded, having to be weighed against profits. “The nonprofit has the authority to basically shut down the company if it thinks it’s deviating from [OpenAI’s] mission. Think of it as an off-switch,” Stuart Russell tells TIME. Russell is one of the letter’s signatories and a UC Berkeley computer science professor, who co-authored the field’s standard textbook. “Basically, they’re proposing to disable that off-switch,” he says.

That OpenAI’s competitors are for-profit is besides the point, says Sunny Gandhi, vice president of political affairs at youth-led advocacy group Encode Justice and one of the letter’s signatories. “It’s sort of like asking a conservation nonprofit why they can’t convert to a logging company just because there are other logging companies out there,” he says. “I think that it would be great if xAI and Anthropic were also nonprofit, but they’re not,” he adds. If OpenAI wants to prioritize competitiveness over its original mission, Gandhi says “that’s the problem that their original structure was trying to prevent.”

The open letter’s targeting of the Attorneys General Rob Bonta of California and Kathy Jennings of Delaware is strategic. In March, Elon Musk lost his bid for an immediate preliminary injunction that would block OpenAI’s conversion, but the decision turned largely on Musk’s questionable legal standing—or interest in the case—not the conversion’s inherent legality. The judge indicated Musk’s argument that the for-profit shift breaches OpenAI’s charitable charter is worthy of further consideration, expediting the trial to this fall. Unlike Musk, however, California and Delare’s Attorneys General have a clear legal interest in the case.

California’s Attorney General Rob Bota’s office is reportedly already investigating OpenAI’s plans, and Delaware Attorney General Kathy Jennings has previously signalled she intends to scrutinize any restructuring. Neither responded to TIME’s request for comment on the letter specifically. But how they act may set a precedent, signaling whether corporate governance structures designed to preserve a company’s ideals can withstand the financial gravity of the AI gold rush, or will ultimately buckle under its weight.