Sam Altman-led OpenAI is reportedly engaged in intricate discussions to transform into a for-profit entity, but its board is grappling with valuing Microsoft Corp.'s MSFT stake while negotiating the worth of its new charitable division at $30 billion.
What Happened: The restructuring talks, ongoing since September, aim to split OpenAI into two entities. The charitable arm would retain a stake in the newly formed public benefit corporation (PBC).
Determining Microsoft’s equity in the PBC is a significant hurdle, as is deciding the equity for CEO Altman, according to a report by the Financial Times.
This comes at a time when President Donald Trump's administration announced the $500 billion Stargate AI project, with OpenAI, Oracle Corp. ORCL, and SoftBank Group SFTBY leading it.
According to the report, the charitable arm’s valuation could reach approximately $30 billion, with most of it realized as equity in the PBC. The rest would be in cash.
The transition is crucial for OpenAI to secure additional funding for advanced AI development. However, it marks a departure from its non-profit roots, raising legal and ethical questions.
The company reportedly has a two-year deadline to finalize the conversion, or investors may reclaim part of their $6.6 billion investment.
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Why It Matters: The transition of OpenAI to a for-profit structure has sparked significant legal and industry interest. The move is part of OpenAI’s strategy to evolve and align with its mission of ensuring artificial general intelligence (AGI) benefits humanity, as outlined in their transition plans announced in December.
However, this shift has not been without controversy. Elon Musk, one of the co-founders of OpenAI, has been actively opposing the change.
In early January, Musk’s legal team urged the attorneys-general of California and Delaware to enforce an auction of OpenAI's stake.
This legal battle has drawn attention from prominent figures like Geoffrey Hinton, known as the “Godfather of AI,” who has sided with Musk in this dispute.
The outcome of these discussions and legal challenges could significantly impact the future of AI development and the balance between profit and public benefit in the tech industry.
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