OpenAI Scraps Controversial Restructuring Plan Amid Criticism

In September 2024, OpenAI, the organization behind ChatGPT, announced plans to restructure its commercial arm into a for-profit Public Benefit Corporation (PBC). This move aimed to attract substantial new investments and better position the company in the competitive AI landscape. The restructuring would involve transitioning from its original nonprofit model while maintaining a separate nonprofit segment. OpenAI stated that establishing the PBC would enable it to "balance shareholder interests, stakeholder interests, and a public benefit interest" in its decision-making while allowing it to "raise the necessary capital with conventional terms."

Concurrently, several key executives departed from OpenAI:

• Mira Murati, Chief Technology Officer, announced her departure after six and a half years with the company. Murati played a pivotal role in developing key products like ChatGPT and DALL-E. Her decision to leave was described as a personal choice to explore new opportunities.

• Bob McGrew, Chief Research Officer, and Barret Zoph, Vice President of Research, also announced their departures. These leadership changes came at a crucial time as OpenAI sought to secure new funding and navigate its restructuring efforts.

The proposed restructuring faced significant criticism and legal challenges:

• Elon Musk, a co-founder and early investor, filed a lawsuit alleging that OpenAI prioritized profits over its original mission to benefit humanity. Musk's lawsuit contended that the restructuring would remove important oversight of its technology.

• A group of former employees and legal experts sent a letter to the attorneys general of California and Delaware, arguing that the restructuring was illegal and would remove governance safeguards from the nonprofit. They contended that the nonprofit is best positioned to advance its mission by continuing to control OpenAI's for-profit arm.

In May 2025, after mounting pressure from critics and discussions with state attorneys general, OpenAI announced it would remain under the control of its founding nonprofit board, scrapping its controversial plan to split off its commercial operations as a for-profit company. CEO Sam Altman stated, "We made the decision for the nonprofit to stay in control after hearing from civic leaders and having discussions with the offices of the Attorneys General of California and Delaware."

Following her departure from OpenAI, Mira Murati founded Thinking Machines Lab Inc. in February 2025. The AI startup quickly gained attention, securing a $2 billion early-stage funding round led by Andreessen Horowitz, valuing the company at $12 billion. Thinking Machines Lab is structured as a public benefit corporation and has attracted talent from competitors, including former OpenAI employees.

OpenAI's proposed restructuring and subsequent reversal highlight the tension between securing necessary funding for AI development and maintaining ethical oversight. The debate underscores the importance of governance structures that prioritize public interest in the rapidly evolving AI industry. The formation of Thinking Machines Lab by former OpenAI executives suggests a growing trend of AI startups adopting public benefit corporation models to balance profit motives with societal impact.

These developments reflect a period of transformation for OpenAI, with implications for its strategic direction and governance structure.