Elon Musk wins as Sam Altman’s OpenAI abandons for-profit plans

Elon Musk got what he wanted. OpenAI is dropping its plan to become a for-profit company and will remain under the control of its original non-profit parent.

The decision comes after a ton of public backlash, legal threats, and a high-profile lawsuit from Elon, who co-founded the company and later became one of its biggest critics.

The decision means the non-profit board will still have full authority over all operations, even though investors will now be able to earn more than they were originally promised.

The company said its current for-profit subsidiary will be turned into a public benefit corporation. That structure removes the existing limit on how much money investors can make, but the non-profit will still hold the power.

OpenAI was clear that the change lets them raise more money at high valuations without giving up actual control. And they’re not hiding the numbers either—the last round had the company sitting at a $260 billion valuation.

OpenAI flips after lawsuits, criticism, and government talks

The shift follows serious pressure from inside and outside the AI world. Elon’s lawsuit wasn’t the only one throwing punches. Former staff and members of the AI research community said that turning the company into a pure-profit machine would trash its original mission.

That mission, built into its foundation documents, is simple: build artificial intelligence that actually helps people. The problem, they argued, was that without the non-profit calling the shots, investors and execs would only care about making money.

On Monday, Sam Altman, who leads OpenAI, claimed none of the outside pressure mattered. “We’re all obsessed with our mission. You’re all obsessed with Elon,” he said. But that didn’t stop the company from quietly working behind the scenes with state attorneys-general in Delaware and California. 

That’s where OpenAI is incorporated and based. Both offices demanded guarantees that the non-profit would stay in charge and that any future changes would not sneak assets away from the non-profit into the for-profit side.

The company also had to assure its biggest investor, Microsoft, that the new structure wouldn’t mess with its rights. And even though the new setup removes the cap on investor returns, it keeps the non-profit board in full control.

Bret Taylor, the chair of the board, said the change came after talking with legal officials and public leaders. “We made the decision for the non-profit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the attorney-general of Delaware and the attorney-general of California,” he said.