OpenAI revealed that Elon Musk, one of its co-founders, had sought a for-profit structure for the organization back in 2017.
The revelation comes after a federal court case filed by the billionaire last November to have OpenAI block its entire transition to a for-profit model.
In a blog post titled "Elon Musk wanted an OpenAI for-profit," OpenAI claimed Musk left the organization when he could not get majority control. According to the report, Musk had said that OpenAI would fail but now leads a competing AI startup called xAI.
He claimed that the nonprofit model blurred incentives and proposed a hybrid form, a traditional company with a nonprofit. The idea of forming a public benefit corporation proposed by Musk was considered at first but then dismissed by OpenAI because of a disagreement on control and equity. After negotiations broke down, Musk walked away from the deal and suggested instead that OpenAI be merged into Tesla's AI division as competition from Google was deemed to be too high. Growth and Transition by OpenAI.
It was 2015 when it began as a nonprofit but had experienced significant growth following the exit of Musk from the firm.
Read More: OpenAI Faces Billion-Dollar Lawsuit from Canadian Media Outlets Over Copyright Violations
When OpenAI Became a For-Profit Organization
In 2019, it began adopting the "capped-profit" model, ensuring some level of investor return but keeping the governing body nonprofit, as shared by CNBC.
The company exploded in international fame with ChatGPT launched in 2022. It has pushed up its valuation to $157 billion. It has received over $13 billion in funds from investors such as Microsoft and Nvidia.
However, the firm is also losing heavily and it is estimated to lose $5 billion on revenue of $3.7 billion this year. Musk's court wars with OpenAI are intensifying. His lawsuit accuses OpenAI of violating its original mission and has claims for antitrust violations involving Microsoft and OpenAI. Competition in the AI market is getting stiffer, with players like Google, Amazon, and Musk's xAI competing to top each other.
Now, OpenAI currently plans to transition into a fully for-profit public benefit corporation with the aim of attracting more investment while remaining under nonprofit oversight. However, ongoing legal disputes and regulatory scrutiny may change the future of the company.
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