OpenAI has faced an internal power struggle over its organizational structure since its founding in December 2015. Created by Sam Altman, Greg Brockman, Ilya Sutskever, and Elon Musk, it was originally a nonprofit research lab dedicated to developing artificial intelligence for the benefit of all. The founders emphasized transparency, promising to share research openly and prioritize societal well-being over profit.
By 2019, however, funding limitations forced a shift in structure. To secure the necessary capital, OpenAI established a for-profit subsidiary, OpenAI LP, operating under a “capped-profit” model. This setup allowed investors to earn up to 100 times their investment, while control remained with the nonprofit parent. The goal was to attract funding without abandoning the original mission.
Maintaining this balance proved difficult. With Microsoft investing over \$13 billion, OpenAI rapidly advanced technologies like ChatGPT and DALL-E. Yet some founders and observers grew concerned that large financial interests might dilute the company’s founding principles.
In late 2024, OpenAI proposed converting its for-profit subsidiary into a standalone public benefit corporation. This new structure would help raise more capital and offer equity incentives, while the nonprofit would exchange much of its control for shares, using proceeds for charitable purposes. Supporters saw this as a way to stay competitive in AI development. Critics, however, feared the move would redirect charitable assets toward investors and weaken the nonprofit’s oversight.
In early 2025, Elon Musk entered the fray with a lawsuit, accusing OpenAI’s leadership of betraying its original mission. He criticized the company for becoming closed-off and profit-driven. Musk then led a group that offered \$97.4 billion to acquire the nonprofit entity that controls OpenAI’s for-profit arm. This move was widely seen as an attempt to prevent the spin-off and keep investor influence intact. OpenAI rejected the bid, and Altman responded online with a tongue-in-cheek remark, offering to buy Twitter for \$9.74 billion.
A court ruling later confirmed Musk could not legally block OpenAI’s structural changes. Still, mounting pressure seemed to impact the organization’s direction. On May 6, 2025, OpenAI announced it would no longer pursue the public benefit corporation conversion as originally proposed. Instead, it would restructure the for-profit arm into a public benefit corporation, but control and majority ownership would remain with the nonprofit parent.
Sam Altman and board chair Bret Taylor noted that the final decision was influenced by talks with civic leaders and legal officials from California and Delaware. Altman reaffirmed that OpenAI would continue to be governed by its nonprofit foundation.
In the U.S., nonprofits cannot distribute profits to individuals and must reinvest all income in their mission. For-profit corporations, by contrast, are answerable to shareholders who seek financial returns. Public benefit corporations exist somewhere in between, with a legal responsibility to balance profit with positive societal impact. OpenAI’s capped-profit model was designed to merge these goals. Its recent decision to maintain nonprofit oversight underscores the ongoing challenges of aligning powerful financial incentives with a public-interest mission in the rapidly growing AI sector.