Meta Platforms has urged California Attorney General Rob Bonta to block OpenAI’s transition from a nonprofit to a for-profit organization. The move aligns Meta with Elon Musk, who has already sought legal action against OpenAI’s restructuring.
Meta’s letter, dated Thursday and first reported by The Wall Street Journal, warns that the shift could have far-reaching implications for Silicon Valley. The company argues that OpenAI’s change in status would set a troubling precedent, allowing future startups to operate as nonprofits to gain tax and fundraising advantages, only to later pivot to profit-making ventures. Meta wrote that such practices could lead to “a proliferation of similar start-up ventures that are notionally charitable until they are potentially profitable.”
Meta’s stance is notable, given its direct competition with OpenAI in the artificial intelligence sector. The letter calls on the attorney general to take “direct action” and supports Elon Musk and former OpenAI board member Shivon Zilis in representing the public interest in Musk’s lawsuit against OpenAI. Musk, who co-founded OpenAI but split from the organization, has since launched his own AI company, xAI, and filed a lawsuit seeking to halt OpenAI’s for-profit conversion.
Meta further criticized OpenAI’s approach, stating, “OpenAI should not be allowed to flout the law by taking and reappropriating assets it built as a charity and using them for potentially enormous private gains.” The company also requested an investigation into OpenAI’s past practices as a nonprofit, alleging that the organization raised billions of dollars under its original nonprofit mission but now seeks to retain those benefits while transitioning to a profit-driven model.
OpenAI has responded to the criticism by publishing communications from Musk, including emails and texts, suggesting that he had previously pushed for the company to become for-profit under his leadership. OpenAI board chair Bret Taylor issued a statement emphasizing the organization’s intent to maintain its nonprofit while ensuring any restructuring aligns with its mission and secures full value for its nonprofit stake.
Allowing nonprofits to transform into for-profit entities raises valid concerns about fairness. It risks incentivizing startups to exploit charitable status for initial gains while later pursuing private profits, creating an uneven playing field and undermining public trust.
This clash underscores the escalating competition and ethical debates within the rapidly evolving AI industry.
Featured Image courtesy of Jaap Arriens/NurPhoto via Getty Images
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