OpenAI plans to transition to a public benefit corporation to balance societal interests and profits

From Investing.com: 2024-12-27 16:51:21

OpenAI plans to transition its for-profit arm into a Delaware public benefit corporation (PBC) to raise capital and compete in the AI race against companies like Google. Rivals, including Anthropic, have also adopted the PBC structure to balance societal interests and shareholder value.

PBCs are legally required to pursue public benefits, including social and environmental goals. Delaware allowed the formation of PBCs in 2013, and as of December 2023, there were 19 publicly traded PBCs, according to research.

Under the new organization, the non-profit will own shares in the for-profit, and the for-profit will fund the charitable mission of the non-profit. This setup will help OpenAI run its operations and business while pursuing charitable initiatives in various sectors.

Becoming a benefit corporation does not guarantee a company will prioritize its mission over profit, as the law only requires a “balance” between the two. Publicly traded PBCs are also more susceptible to takeovers, as bidders may argue that profit maximization conflicts with public benefit goals.

OpenAI’s rivals, Anthropic and xAI, have also adopted PBCs. Companies like Allbirds, Kickstarter, Patagonia, and Warby Parker are examples of existing PBCs that focus on sustainability, creative projects, environmental contributions, and social impact.



Read more at Investing.com: Explainer-Why OpenAI plans transition to public benefit corporation By Reuters