OpenAI Makes the Switch to a for Profit Corporation

OpenAI, the company behind ChatGPT, announced its change in designation to a for-profit company on Dec. 24, 2024. The company was founded to use artificial intelligence for humanity’s benefit. The switch has prompted the California Department of Justice to start an investigation into the company. Discussions about the operations of OpenAI have always been rampant, and this recent decision has become a prominent talking point in the tech world. OpenAI has stated its plan to restructure as a public benefit corporation, or P.B.C., which is a for-profit corporation designed to create public and social good. A blog post from OpenAI’s website covered their change in designation. “The P.B.C. is a structure used by many others that requires the company to balance shareholder interests, stakeholder interests and a public benefit interest in its decision making,” the company said. “It will enable us to raise the necessary capital with conventional terms like our competitors.” Rob Bonta, California's attorney general, received a letter from Meta [a competitor of OpenAI] urging him to resist OpenAI becoming a for-profit company. According to the Wall Street journal, Meta argued that there could be an unfair advantage for OpenAI because they enjoyed no taxes from being a non-profit until it got very lucrative and the company mission changed. Miles Parr (’27), a politically active student at Samo, gave his stance on how OpenAI going for-profit could be detrimental to society at large. “I think if it went for-profit, it could be bad because it could restrict a lot of people's access to it.  if a lot of big corporations start using it, it will be just another tool in making the rich richer.”Deepseek, a new Chinese artificial intelligence system, poses as a new opponent for American A.I, specifically OpenAI. Developed in 2023, Deepseek claims to be produced for under $6 million. This is extremely low compared to the $250 billion that analysts predict to be spent by major American tech companies on AI. This alternative went on market and demonstrated at the same time that OpenAI went for-profit, that low funded alternatives could challenge it and has caused declines in companies like Microsoft and Nvidia. Tech analysts have questioned whether the inexpensive claims are legitimate, speculating that the actual cost could be higher. Chinese AI naturally receives some skepticism in America because of privacy and security concerns, but Deepseeks open source model appears to earn trust with some users for it’s emphasis on public access, changing and improving its components. Eran Halperin, an adjunct professor of Computer Science gave his expertise on the topic. “The original idea of OpenAI was that one company shouldn’t have sole control over AI models, especially those capturing vast amounts of knowledge, but today that’s not the case,” Halperin said. “In practice, their model is closed.” OpenAI now charges for access through APIs [application programing interfaces], which may restrict the ability of smaller players to develop competing technologies. When making their models available only via payment, many fear the company may restrict the abilities of smaller developers, start-ups and exclude under-resourced communities using AI for good.As artificial intelligence expands, so do the challenges. Developing impactful AI is expensive and resources are costly. Thus, going for-profit can also be seen as the rational, strategic move. The shift to go for-profit is seen by some as unethical as the original mission of the company was to improve humanity through AI and have it be accessible to all. Going for-profit  can put the power of AI in very few and very powerful hands. However, since AI became available to the general public it has offered improvements to various fields and become integral to the functionality of numerous industries. OpenAI’s decision has sparked a spectrum of excitement and concerns throughout the tech world. This shift will continue to be observed and evaluated by the general public as the industry continues to advance.