OpenAI completes transformation to become a for-profit entity

OpenAI has completed its long-planned conversion into a for-profit entity, a move that could allow it to raise billions of dollars in investments and potentially pave the way for its stock market debut.

As part of the arrangement, OpenAI and Microsoft announced changes to their long-standing partnership that leaves the tech giant with a 27% stake in the maker of ChatGPT.

The deal changes the nature of the relationship between the two companies, which first partnered in 2019, when OpenAI was a non-profit artificial intelligence (AI) research organization.

Under the terms, Microsoft can now independently pursue artificial general intelligence — sometimes defined as artificial intelligence beyond human intelligence — on its own or in partnership with other parties, the companies said.

OpenAI also said it would convene an expert panel to verify any announcement by the company that it has achieved artificial general intelligence.

The company did not announce who would serve on the committee when contacted by the BBC.

Microsoft will also support OpenAI’s board of directors in transitioning to a for-profit entity, in which the company confirmed Chairman Sam Altman will not own an equity stake, as first reported by Bloomberg.

The original partnership between the two companies gave Microsoft the rights to much of what OpenAI produced at a time when the startup was hungry for cloud computing resources.

Since then, OpenAI has entered into a series of deals with a range of other major players in the technology space, leading to speculation that an AI bubble may be in the offing.

The revised deal extends Microsoft’s rights to OpenAI’s AI models through 2032 but excludes consumer devices.

OpenAI brought AI to the mainstream user in 2022 by introducing ChatGPT.

At the company’s DevDay event in San Francisco earlier this month, Altman said the company had reached 800 million weekly active users.

OpenAI — now valued at $500 billion — has released a slew of new products aimed at increasing engagement with its AI tools.

These browsers include the AI-powered ChatGPT Atlas, which competes with Google Chrome, and a video creation tool called Sora.

But the company also routinely finds itself at the center of controversy.

Last week, OpenAI blocked Sora 2 from creating fake videos depicting Dr. Martin Luther King Jr. after intervention from the late civil rights leader’s family.

OpenAI also recently said that ChatGPT will soon start allowing erotica for verified adults.

Meanwhile, critics say OpenAI has downplayed the potential mental health impacts of its AI tools, which they accuse of being built with few guardrails in the pursuit of profits.