OpenAI mulls dropping profit restrictions ahead of $100 billion valuation push OpenAI mulls dropping profit restrictions ahead of $100 billion valuation push
Planned funding round could see OpenAI lifting profit caps, prompting questions on maintaining its mission.
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Updated: Aug. 30, 2024 at 11:43 pm UTC
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OpenAI is considering significant changes to its business model as it gears up for a new investment round that could push its valuation beyond $100 billion, the Financial Times reported on Aug. 30, citing insiders familiar with the matter.
Sources told the newspaper that the AI research company is exploring the possibility of modifying its current “capped for-profit” structure to make it more appealing to large-scale investors. The development comes amid reports that OpenAI is likely to face financial woes in the coming months.
Open discussions
According to the report, OpenAI is in discussions about potentially removing these profit caps. Such a change would allow investors to earn unrestricted profits based on the company’s performance, a move intended to entice major backers.
Thrive Capital, which may invest around $1 billion, is expected to lead the anticipated funding round, while tech giants Microsoft, Apple, and Nvidia have also been mentioned as potential participants.
If the company’s valuation climbs as expected, Microsoft, already a minority shareholder in OpenAI, could see its stake influenced by the introduction of other significant players.
Currently, OpenAI operates as a hybrid organization, combining both non-profit and capped for-profit elements. The board of directors oversees this dual structure, prioritizing the non-profit’s mission to ensure AI advancements benefit all of humanity.
Investors in the capped for-profit arm, including Microsoft, have so far been subject to restrictions on their returns to prevent profit motives from overshadowing ethical considerations.
Concerns
If OpenAI decides to lift these caps, it could provide more lucrative opportunities for investors, although it raises concerns about how the company will continue to honor its commitment to its mission-driven goals.
Furthermore, with major tech firms like Microsoft, Apple, and Nvidia reportedly interested in increasing their stakes, there is anxiety about the level of influence these large corporations might have on OpenAI’s strategic direction. Critics fear that the interests of powerful investors could drive the company towards paths that favor corporate agendas over public good.
As OpenAI prepares for this potentially transformative funding round, the outcome of these deliberations could shape the company’s future, determining its ability to maintain a delicate balance between generating substantial profits and staying true to its founding principles.
The implications of these possible changes on OpenAI’s non-profit side remain unclear, as does the board’s capacity to reassure both investors and stakeholders that the company can pursue profitability without compromising its broader mission or AI safety.
Additionally, some have raised concerns that altering the company’s structure could erode public trust. OpenAI has built its reputation on a commitment to ethical AI, and any perception that it is prioritizing profits over people could lead to skepticism about its intentions and the safety of its technologies.
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Assad Jafri
AJ, a passionate journalist since Yemen's 2011 Arab Spring, has honed his skills worldwide for over a decade. Specializing in financial journalism, he now focuses on crypto reporting.
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OpenAI
OpenAI is an AI research and deployment company committed to ensuring that general-purpose artificial intelligence helps all of humanity.
Nvidia
Nvidia Corporation is a multinational technology company based in Santa Clara, California, that was founded in Delaware.
Microsoft
Microsoft is an American multinational technology company that develops, licenses, and sells computer software, consumer electronics, and personal computers.
Apple
Apple is a multinational American technology company with its main office in Cupertino, California.
