OpenAI has reversed a major restructuring plan that would have shifted control of its operations from its nonprofit parent to a more commercially driven model. The decision follows legal pressure, including a high-profile lawsuit from co-founder Elon Musk, who has long accused the company of abandoning its original mission. In a blog post on Monday, CEO Sam Altman confirmed that OpenAI's nonprofit parent will continue to oversee and control its for-profit arm, stating, "OpenAI was founded as a non-profit, is today a non-profit that oversees and controls the for-profit, and going forward will remain a non-profit that oversees and controls the for-profit. That will not change."
This reversal comes after OpenAI had proposed in December 2023 to restructure its for-profit arm into a Public Benefit Corporation (PBC), a move designed to facilitate capital-raising and reduce legal restrictions on nonprofits. Under this proposal, the nonprofit parent would have retained ownership but given up control of the for-profit operations. Now, OpenAI has announced that while it will still create a PBC structure to attract more capital, the nonprofit will retain its control over the organization, a decision influenced by feedback from civic leaders and state Attorneys General.
Altman described this shift as a "compromise" that satisfies investors and allows OpenAI to continue fundraising while maintaining nonprofit control. He emphasized that the company would not alter its current investor relationships and still intends to draw in substantial investment, particularly through restructuring its for-profit arm.
The timing of this announcement is significant, as it comes amid a lawsuit filed by Elon Musk against Altman and OpenAI’s president, Greg Brockman. Musk, who co-founded OpenAI in 2015 but left in 2018 after clashing with Altman, is accusing the pair of breach of contract and fraud. Musk’s legal claim centers around allegations that OpenAI, originally set up to benefit the public, shifted its mission as its AI technology approached Artificial General Intelligence (AGI), ultimately becoming a tool for self-enrichment. Musk’s complaint criticizes OpenAI's commercial partnership with Microsoft and argues that its nonprofit identity has been compromised.
Despite the lawsuit, OpenAI is confident that its revised approach will allow it to attract significant investment. The company recently announced plans to raise up to $40 billion in a new funding round led by Japan’s SoftBank. Musk’s lawsuit is scheduled for a jury trial in March 2026, and his lawyer has signaled that the case will proceed, with the lawsuit highlighting issues with OpenAI’s "non-profit control" structure.
The ongoing tension between Musk and Altman has been years in the making, fueled by Musk’s frustration with OpenAI’s shift from an open-source, non-profit organization to a closed-source, profit-driven entity controlled by Microsoft. Musk has repeatedly voiced his concerns about OpenAI on social media, accusing it of betraying its original mission to counterbalance tech giants like Google. This philosophical divide culminated in Musk’s departure from the company and the launch of his own AI ventures, including Neuralink and xAI.
In the blog post, Altman reaffirmed OpenAI’s commitment to democratizing AI, asserting that the goal is for AGI to benefit all of humanity. He emphasized OpenAI’s desire to give users freedom in using AI tools, with few restrictions. Despite differing opinions on the path forward, Altman remains firm in his belief that this model strikes the right balance between ethical AI development and attracting the necessary investment to continue scaling the company.
