Microsoft (MSFT, Financial)-backed OpenAI's updated its plan to spin its for-profit arm into a public benefit corporation—and it's a mixed bag.
On May 5, the company said it would keep its nonprofit parent in the driver's seat, legally bound to “consider the public good” as it eyes an eventual IPO. In theory, that lets investors chase returns without steering the mission off course.
But a watchdog group called Not For Private Gain isn't convinced: they've fired off a letter to the attorneys general in California and Delaware saying this tweak still leaves too many loopholes. Profits aren't capped, there's no guarantee that extra cash flows back to the nonprofit, and if the nonprofit board can't force the issue, neither can state regulators.
Despite that pushback, OpenAI's board seems willing to listen—activists even praised them as “open-minded” for rolling out this version. Now the guardrails are on the table: capped payouts, ironclad profit-redistribution rules and clear, enforceable language that the charitable mission trumps everything else. The group has until May 29 to nail down stronger commitments, or they'll press the AGs to step in.
Bottom line: how OpenAI squares investor incentives with its lofty mission could make or break its trust with researchers, regulators and future shareholders—and ultimately shape the path to its IPO.
