OpenAI, the pioneering artificial intelligence company and developer of ChatGPT, announced on Monday that it has dropped its plans to become a for-profit company. Instead, the nonprofit organization managing it will continue to oversee its business operations for the benefit of the public.
OpenAI, whose largest investor is tech giant Microsoft with $13.75 billion invested, was founded in 2015 as a nonprofit organization. However, in 2019, it transitioned to a "limited profit" model—a hybrid structure allowing for partial commercial activity.
Over the past two years, under the leadership of CEO and founder Sam Altman, the company has explored restructuring into a for-profit model to attract new investors. In recent months, it prepared to raise $30–40 billion, led by the corporate giant SoftBank, to continue its operations. Just this morning, it was reported that OpenAI had reached a deal to acquire the AI coding startup Windsurf for $3 billion.
However, in a surprising announcement, Board Chair Brett Taylor stated on the company’s blog that OpenAI would remain under the oversight of its nonprofit organization. Formally, OpenAI’s business arm, which handles massive revenues, will transition into a Public Benefit Corporation (PBC)—a for-profit entity that prioritizes serving the public interest. The nonprofit will retain a significant stake in the corporation.
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Sam Altman at the White House with President Trump
(Photo: Andrew Harnik / Getty Images North America)
In other words, in exchange for its controlling stake in the company, the nonprofit is expected to generate billions of dollars, which will be funneled back into OpenAI and invested in public-benefit initiatives in AI, particularly in the health, education and science sectors. According to the company, this move is necessary to secure the capital needed for growth and operational expansion.
Taylor noted that the decision was made after OpenAI "listened to a range of civic leaders and held constructive dialogue with the Attorneys General of Delaware and California." Analysts believe this vague phrasing masks failed negotiations with U.S. regulators regarding the restructuring, as well as the impact of significant public criticism of OpenAI and Altman for considering a departure from the company’s original mission—to ensure that AI research benefits all of humanity.
One of the harshest critics of the move was Elon Musk, an early investor in OpenAI who later parted ways with the company. Musk filed for an injunction to block the restructuring, though the court rejected his request and allowed the case to proceed to a jury trial in spring 2026.
Additionally, a group of former OpenAI employees and members of Encode, a California-based nonprofit, recently submitted affidavits in support of Musk’s lawsuit. Another coalition of organizations, nonprofits and labor groups petitioned California Attorney General Rob Bonta to prevent OpenAI from becoming a for-profit entity, accusing the company of "failing to protect assets designated for charitable purposes."
Meanwhile, several Nobel laureates, law professors and civil society organizations sent letters to Bonta and Delaware Attorney General Kathy Jennings, urging them to halt OpenAI’s attempts to restructure as a for-profit entity.
In a letter to employees, Altman wrote that OpenAI will need "billions of dollars" to achieve its goal of "making the company’s services broadly accessible to all of humanity." He added that the nonprofit organization will become a major shareholder, with its valuation independently assessed by financial advisors.
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Reports from the U.S. suggest that OpenAI’s pivot has yet to receive the approval of its largest investor, Microsoft, which has so far declined to comment on the matter. The software giant is reportedly negotiating with OpenAI to ensure that the move does not harm its significant investment in the company.
Microsoft is not the only entity whose approval OpenAI needs. The Attorneys General of California and Delaware are expected to oversee the restructuring process, and OpenAI will be required to conduct a market valuation to determine the nonprofit’s precise stake in the new entity.
A reminder: In 2023, OpenAI’s board of directors unexpectedly fired Altman, allegedly due to criticism over the balance between product safety and pressures to commercialize. Altman was reinstated within a day, and the board members who dismissed him were forced to resign.