OpenAI has scrapped a major plan to restructure its corporate governance, opting instead to maintain control under its nonprofit parent organization, a move that curtails CEO Sam Altman’s influence and responds to growing public and legal pressure.
The decision, announced Monday, follows mounting criticism and a lawsuit from co-founder Elon Musk, who claims OpenAI is drifting from its founding mission of developing artificial intelligence to benefit humanity. Musk’s legal challenge will proceed, with his attorney arguing the revised plan lacks transparency.
OpenAI had originally proposed converting its for-profit arm into a public benefit corporation (PBC), giving it flexibility to raise billions in funding while diluting the nonprofit’s control. That plan drew scrutiny from regulators, civil society groups, and state attorneys general in California and Delaware.
Instead, OpenAI said its nonprofit will remain in control and also become a major shareholder in the for-profit arm. Chairman Bret Taylor called it a compromise that preserves the organization’s original structure while satisfying investor expectations. Altman said the revised plan would still support fundraising, with no changes to existing investor relationships, including with Microsoft.
Critics remain cautious. Former OpenAI ethics adviser Page Hedley questioned whether the nonprofit’s mission would truly take legal precedence over commercial goals under the new arrangement. He warned the current language lacks the clarity found in OpenAI’s original 2019 charter.
The governance saga unfolds as OpenAI pursues ambitious funding targets, including a \$40 billion round reportedly led by Japan’s SoftBank. That deal had been linked to a full shift to for-profit status. Monday’s decision leaves that future unclear.
Meanwhile, Musk’s lawsuit continues. His legal team claims the nonprofit’s control is being overstated and that its equity stake in the for-profit arm has been drastically reduced.
OpenAI has dismissed the lawsuit as a bad-faith attempt to derail its progress.
