‘Illegal’: Elon Musk slams OpenAI ’for-profit’ shift as CEO Sam Altman eyes 7% stake

Tesla Chief Executive Officer (CEO) Elon Musk criticised OpenAI's potential transition to “convert a non-profit into a for-profit” model, calling it “illegal.” His remarks came Thursday in response to reports suggesting that the ChatGPT-maker OpenAI is working on a plan to restructure its core business into a for-profit benefit corporation. 

Reacting to the news on X, Elon Musk posted, “You can’t just convert a non-profit into a for-profit. That is illegal.”

OpenAI's for-profit structuring

Sources told Bloomberg that OpenAI is considering giving CEO Sam Altman a 7 percent equity stake in the company while transitioning to a for-profit business model.

According to Reuters, OpenAI's non-profit arm will continue to exist and retain a minority stake in the for-profit company. This move could enhance the company's appeal to investors and may have implications on how it manages AI risks under a new governance structure.

“Chief executive Sam Altman will also receive equity for the first time in the for-profit company, which could be worth $150 billion after the restructuring as it also tries to remove the cap on returns for investors,” sources told Reuters.

“We remain focused on building AI that benefits everyone, and we’re working with our board to ensure that we’re best positioned to succeed in our mission. The non-profit is core to our mission and will continue to exist,” an OpenAI spokesperson said.

Sources added that the restructuring plan is still being hashed out with lawyers and shareholders, and the timeline for completion remains uncertain.

These reports follow a series of leadership changes at the startup. OpenAI's longtime chief technology officer, Mira Murati, abruptly announced her departure from the company on Wednesday. Greg Brockman, OpenAI's president, has also been on leave.

Founded in 2015 as a non-profit AI research organisation, OpenAI added the for-profit OpenAI LP entity in 2019 as a subsidiary of its non-profit, securing capital from Microsoft to fund its research.