New document shows OpenAI’s journey from nonprofit to $157 billion company

Assets included a $10 million loan from one of the four founders. | Photo: Bloomberg

It’s a measure of the enormous distance OpenAI and the technology it researches and develops have come in less than a decade.

In the filing, OpenAI indicated that it does not intend to enter into joint ventures with for-profit organizations, which it has since done. It also said it had no intention of playing a role in the development of commercial products or equipment, and pledged to make its research freely available to the public.

A spokesperson for OpenAI, Liz Bourgeois, said in an email that the organization’s missions and objectives have remained constant, although the way it carries out its mission has evolved alongside technological advances.

Attorneys who specialize in advising nonprofits have been keeping a close eye on OpenAI’s meteoric rise and its changing structure. Some wonder whether the size and scope of current ambitions have reached or exceeded the limits of interactions between nonprofits and for-profits.

They also question how much her primary activities further her charitable mission, what it is meant to do, and whether some may benefit privately from her work, which is prohibited.

Overall, nonprofit experts agree that OpenAI has gone to great lengths to design its corporate structure to comply with the rules governing nonprofits. OpenAI’s filing with the IRS seems typical, says Andrew Steinberg, counsel at Venable LLP and member of the American Bar Association’s nonprofit committee.

If the organization’s plans and structure were to change, it would have to report that information in its annual tax returns, Steinberg said, which it has done.

At the time the IRS reviewed the application, there was no information that the current business structure and the investment structure they were pursuing was what they had in mind, he said. And that’s okay, because that could have happened later.

Here are some highlights from the application:

Early research goals

At the outset, OpenAI’s research plans look strange in light of the race to develop AI sparked in part by the 2022 release of ChatGPT.

OpenAI told the IRS that it planned to train an AI agent to solve a wide range of games. The goal was to build a robot that could do housework and to develop a technology that could follow complex instructions in natural language.

Today, the company’s products, including text-to-image generators and chatbots that can detect emotions and write code, far exceed these technical thresholds.

No commercial ambitions

The nonprofit OpenAI indicated on its application form that it had no plans to enter into joint ventures with for-profit entities.

It also wrote: OpenAI does not intend to play a role in the development of commercial products or equipment. The intention is to make his research freely available to the public on a non-discriminatory basis.

OpenAI spokesperson Bourgeois said the organization believes the best way to achieve its mission is to develop products that help people use AI to solve problems, including many products it offers for free. But they also believe developing commercial partnerships has helped further their mission, she said.

Intellectual property

OpenAI reported to the IRS in 2016 that regularly sharing its research with the general public is central to OpenAI’s mission. OpenAI will regularly publish its research results on its website and share the software it has developed with the world under open source software licenses.

The company also wrote that it intends to retain ownership of any intellectual property it develops.

The value of that intellectual property and whether it belongs to the nonprofit or for-profit subsidiary could become major questions if OpenAI decides to change its corporate structure, as Altman confirmed in September that it was considering.

First publication: October 12, 2024 | 8:08 PM IST