OpenAI just completed one of Silicon Valley's most scrutinized corporate makeovers, officially splitting into a for-profit corporation nested inside its nonprofit foundation. The restructuring ends months of legal battles with estranged co-founder Elon Musk and unlocks Softbank's massive $30 billion investment, fundamentally changing how the world's most valuable AI company operates.
The corporate restructuring that's been brewing behind closed doors for months is finally done. OpenAI announced Tuesday it has successfully split into a for-profit corporation operating under its nonprofit foundation's oversight, ending one of tech's messiest corporate transformations.
The new structure creates OpenAI Group, a public benefit corporation that can raise unlimited funding and make acquisitions without the constraints that hobbled the original nonprofit. The OpenAI Foundation keeps meaningful control though, owning 26% of the for-profit entity with warrants for additional shares tied to growth milestones. More importantly, the foundation appoints OpenAI Group's entire board of directors.
"We believe that the world's most powerful technology must be developed in a way that reflects the world's collective interests," OpenAI chairman Brett Taylor wrote in a company blog post. The messaging carefully emphasizes continuity of mission even as the corporate machinery transforms completely.
The financial implications hit immediately. Microsoft emerges with the largest single stake at roughly 27%, valued at about $135 billion based on OpenAI's latest valuation. According to Microsoft's own announcement, the deal extends the tech giant's exclusive IP rights to OpenAI's models through 2032 and includes a fascinating provision: if OpenAI ever claims it's achieved artificial general intelligence, an independent expert panel must verify the breakthrough.
Employees and other investors control the remaining 47% of OpenAI Group, setting up what's essentially a three-way power structure between the foundation's mission focus, Microsoft's commercial interests, and the workforce that built ChatGPT into a global phenomenon.
The restructuring removes the final obstacle to Softbank's unprecedented $30 billion investment, announced in April but contingent on successful for-profit conversion. The Information reported Saturday that the final funding installment had been approved, telegraphing today's announcement.
