OpenAI has reversed course on a major restructuring plan, choosing to maintain nonprofit control over its for-profit arm in a move likely to temper CEO Sam Altman’s influence. The decision follows mounting criticism from civil society leaders and legal pressure from co-founder Elon Musk, who filed a high-profile lawsuit earlier this year alleging that OpenAI had deviated from its original mission of advancing artificial intelligence (AI) for the benefit of humanity. In a blog post, Altman reaffirmed that OpenAI’s nonprofit parent organization will continue to oversee and control the for-profit entity, stating, “That will not change.”
Initially, OpenAI proposed converting its for-profit subsidiary into a public benefit corporation (PBC), a structure intended to balance profit-making with social impact. The aim was to unlock more funding opportunities and reduce the limitations associated with being controlled by a nonprofit. However, the plan raised red flags among stakeholders concerned about whether the nonprofit’s charitable mission would remain central, particularly in the context of increasing commercial pressures. OpenAI’s board, led by Chairman Bret Taylor, revealed that discussions with attorneys general from California and Delaware, as well as feedback from civic leaders, influenced the decision to keep the nonprofit in charge.
Despite maintaining the nonprofit’s control, OpenAI will continue with its plans to restructure the for-profit arm to facilitate capital raising. Altman explained that while the nonprofit would still be the majority shareholder, the revised structure would enable them to attract the funding needed to compete in the fast-moving AI space. OpenAI is working with Microsoft, regulators, and newly appointed nonprofit commissioners to finalize the equity distribution plan. Although investor profit caps will be removed, Altman emphasized that existing investor relationships will not be affected and expressed confidence that the new arrangement clears the bar for future fundraising.
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However, critics have voiced concerns over the lack of clarity surrounding the revised governance model. Page Hedley, a former ethics advisor at OpenAI and current organizer of the watchdog group Not For Private Gain, pointed out that the updated proposal fails to clarify whether OpenAI’s commercial ambitions will legally remain subordinate to its original charitable mission. Hedley warned that under a PBC structure, board obligations could shift toward maximizing shareholder value, potentially undermining OpenAI’s founding purpose.
The restructuring announcement also comes amid escalating legal battles. Elon Musk, who helped co-found OpenAI, continues to pursue a lawsuit aimed at preventing the company’s transition away from nonprofit governance. A jury trial is scheduled for March 2026. Musk’s attorney criticized the new plan, calling it vague and suggesting that the nonprofit’s equity stake in the for-profit arm has been “sharply reduced.” The lawsuit remains active, with no indication that it will be withdrawn in light of the latest developments.
Meanwhile, OpenAI remains focused on raising funds to support its AI ambitions. The company is reportedly seeking up to $40 billion in a funding round led by Japan’s SoftBank Group at a $300 billion valuation. This round, initially contingent on OpenAI shifting to a for-profit structure, is still expected to move forward despite the revised governance model. SoftBank and Microsoft have yet to comment publicly on the latest developments.
As OpenAI attempts to balance mission and money, its future hinges on whether it can maintain public trust while navigating the high-stakes race for artificial general intelligence — and whether its hybrid structure can truly serve both societal good and investor expectations.
