OpenAI may move forward with new business structure, partnership with Microsoft, regulators say

OpenAI said Tuesday it has reorganized its ownership structure and converted its business into a public benefit corporation after two crucial regulators, the Delaware and California attorneys general, said they would not oppose the plan.

- By MATT O'BRIEN and THALIA BEATY AP Business Writers

THE OPENAI LOGO appears on a mobile phone in front of a computer screen with random binary data, March 9, 2023, in Boston. (AP File Photo)

(AP File Photo)

The restructuring paves the way for the ChatGPT maker to more easily profit off its artificial intelligence technology even as it remains technically under the control of a nonprofit.

OpenAI CEO Sam Altman said in a call Tuesday that "the most likely path" for the newly formed business is that it becomes publicly traded on the stock market, "given the capital needs that we'll have and sort of the size of the company," though a Wall Street debut was not a part of the announcements detailed Tuesday.

Delaware Attorney General Kathy Jennings and California Attorney General Rob Bonta said in separate statements that they would not object to the restructuring, seemingly bringing to an end more than a year of negotiations and announcements about the future of OpenAI's governance and the power that for-profit investors and its nonprofit board will have over the organization's technology.

The company also said it has signed a new agreement with its longtime backer Microsoft that gives the software giant a roughly 27 percent stake in OpenAI's new for-profit corporation but changes some of the details of their close partnership. Microsoft's $135 billion stake will be just ahead of the OpenAI nonprofit's $130 billion stake in the for-profit company.

The attorneys general of Delaware, where OpenAI is incorporated, and California, where it is headquartered, had both spent months investigating the proposed changes.

"We will be keeping a close eye on OpenAI to ensure ongoing adherence to its charitable mission and the protection of the safety of all Californians," said Bonta.

OpenAI said it completed its restructuring "after nearly a year of engaging in constructive dialogue" with the offices in both states.