OpenAI Eyes Unfettered For-Profit Model, Raising Eyebrows

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In a significant potential shift, artificial intelligence company OpenAI is reportedly contemplating transitioning from its current capped-profit structure to a full for-profit model. This change, if implemented, could dramatically alter the governance and financial incentives of the organization.

OpenAI to Turn For-Profit

The initial report, published by The Information, revealed that OpenAI’s CEO and co-founder Sam Altman communicated with shareholders during the week of June 10 about this possible pivot. This move, if it comes to fruition, would see OpenAI’s non-profit board relinquishing control, thereby paving the way for a more traditional profit-driven corporate structure.

Current Structure and Valuation

As it stands, OpenAI operates as a unique partnership between its original non-profit entity and a capped-profit arm, a structure designed to balance financial incentives with the company’s mission. 

According to their website, this hybrid model was conceived to foster research into artificial general intelligence (AGI) while still adhering to their overarching vision. However, the company has acknowledged that this structure was born out of necessity; traditional donations were insufficient to sustain their ambitious research and development efforts. Currently, OpenAI boasts a private valuation of approximately $86 billion.

Despite the shift to a capped-profit model, OpenAI’s website still advises investors to consider their contributions more akin to donations due to the high-risk nature of the investment. The advisory notes that stakeholders should be prepared to lose their entire investment, reflecting the uncertainties surrounding the development and impact of AGI.

OpenAI Board Reshuffle and New Appointments

In tandem with these discussions, Altman has been actively reconfiguring the company’s board of directors, a move that underscores the impending changes. New appointees include Sue Desmond-Hellmann, former CEO of the Bill and Melinda Gates Foundation; Nicole Seligman, former VP of Sony; Fidji Simo, CEO and chair of Instacart; and retired U.S. Army general and former NSA director Paul Nakasone.

Controversy and Criticism

Nakasone’s inclusion has sparked controversy, drawing sharp criticism from notable figures like Edward Snowden. Snowden, known for his role as a whistleblower in the U.S. intelligence community, took to X.com to voice his concerns. 

He issued a stark warning to the public, advising against trusting OpenAI or its products, specifically mentioning ChatGPT. Snowden suggested that Nakasone’s appointment was a deliberate move that compromised the rights of individuals globally, labeling it a “calculated betrayal.”

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