OpenAI has abandoned its controversial plan to loosen nonprofit control over its commercial arm.
The decision comes after weeks of pressure from regulators, civic actors, and the legal threat caused by co-founder Elon Musk.
In a sharp reversal, OpenAI confirmed on Monday that its nonprofit parent will remain fully in charge of the for-profit entity responsible for developing and monetising its artificial intelligence products. That’s the same entity behind ChatGPT.
OpenAI had previously planned to become a Public Benefit Corporation—a move that would allow it to raise billions in capital while distancing itself from the nonprofit board.
That idea is now off the table. Instead, OpenAI says the nonprofit remains in charge, though it will take a larger shareholder position within the for-profit operation.
Bret Taylor, OpenAI’s board chair, gave the clearest explanation yet. “We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware,” he wrote.
This pivot was inevitable. The December plan to hand more power to the for-profit raised red flags across Silicon Valley. It threatened to weaken the nonprofit’s oversight and led to fears about whether OpenAI still prioritised the public good over commercial gain. The company’s leadership clearly heard those fears—and acted.
Sam Altman tried to frame the change as a reasonable compromise that satisfies all parties. “This works well enough for investors that they’re happy to continue to fund us to a degree we think we will need,” he said. “We believe this is well over the bar of what we need to be able to fundraise.”
OpenAI still intends to change the structure of its for-profit to allow more capital inflow. The nonprofit board will remain in charge of strategic oversight, but the company plans to move ahead with lifting profit caps for investors. The goal? To compete for capital in a global AI arms pursuit.
Microsoft, OpenAI’s largest backer, hasn’t publicly commented on the change. Neither has SoftBank, which was preparing to lead a funding round worth up to $40 billion. That deal is still on the table, according to Altman. But it was initially contingent on OpenAI’s shift to a PBC model. Whether SoftBank proceeds without that restructuring remains to be seen.
In the background, Elon Musk’s lawsuit continues to gather steam. Filed earlier this year, it accuses OpenAI of betraying its founding principles. Musk says the startup was created to develop AI for humanity—not shareholders.
The case, now scheduled for trial in March 2026, is not going away. Musk’s legal team responded to the recent announcement. “The announcement obscures critical details about the supposed ‘non-profit control’ arrangement, and particularly the sharply reduced ownership stake the non-profit will receive in Altman’s for-profit enterprise—where the non-profit currently holds majority equity.”
Musk’s team argues that the nonprofit’s control, while still technically intact, has been diluted behind closed doors. And critics like Page Hedley, a former OpenAI policy adviser, aren’t reassured.
“Will OpenAI’s commercial goals continue to be legally subordinate to its charitable mission? Who will own the technology that OpenAI develops?” Hedley asked, raising alarms over the opaque restructuring.
“The 2019 restructuring announcement made the primacy of the mission very clear, but so far, these statements have not.”
