Introduction
In a letter sent to California Attorney General Rob Bonta this week, Meta Platforms, Inc. ("Meta") expressed deep concern about OpenAI’s attempt to shed its non-profit status and establish a for-profit entity. The letter argues that OpenAI should not be allowed to flout the law by taking and reappropriating assets built as a charity and using them for potentially enormous private gains.
Background
OpenAI started as a non-profit but stumbled into commercial success with ChatGPT, which now generates billions of dollars in revenue each year. CEO Sam Altman has been clear that the company needs to shed its non-profit status to become more attractive to investors and continue funding its ambitions. However, this conversion could have seismic implications for Silicon Valley and represent a paradigm shift for technology startups.
Meta’s Concerns
Meta argues that OpenAI’s conduct could entice investors to launch organizations as non-profits, collect hundreds of millions of dollars in tax-free donations to support research and development, and then assume for-profit status as their technology becomes commercially viable. This would distort the market by essentially requiring any startup seeking to remain competitive to adopt the same playbook.
Past Practices
Meta also urges Attorney General Bonta to examine whether OpenAI’s past practices are consistent with its obligations as a non-profit – most notably whether it has inappropriately depleted the assets of the non-profit by distributing assets to third-party entities.
Implications for Silicon Valley
If permitted, OpenAI’s restructuring would represent a paradigm shift for technology startups. It would allow investors to reap the same for-profit upside as those who invest conventionally in for-profit companies while also benefiting from tax write-offs bestowed by the government and, ultimately, the public.
Meta Supports Elon Musk’s Fight Against OpenAI
Meta understands that Elon Musk and Shivon Zilis are currently seeking to represent the public interests in Musk v. Altman, No. 4:24-cv-04722-YGR (N.D. Cal.). Although Meta would also urge Attorney General Bonta to take direct action, they believe that Mr. Musk and Ms. Zilis are qualified and well positioned to represent the interests of Californians in this matter.
Conclusion
Meta is committed to openness and transparency in the transformative field of AI. OpenAI’s charitable promise to develop safe and broadly beneficial AI free from commercial pressures is an important one, and it should be kept. Given the breakneck speed at which OpenAI is continuing its for-profit conversion, this is a special case with an urgent necessity for action.
Meta’s Letter in Full
Dear Attorney General Bonta,
We are writing to express our deep concern about OpenAI’s attempt to shed its non-profit status and establish a for-profit entity. We believe that OpenAI should not be allowed to flout the law by taking and reappropriating assets built as a charity and using them for potentially enormous private gains.
As you may know, OpenAI started as a non-profit but stumbled into commercial success with ChatGPT, which now generates billions of dollars in revenue each year. CEO Sam Altman has been clear that the company needs to shed its non-profit status to become more attractive to investors and continue funding its ambitions. However, this conversion could have seismic implications for Silicon Valley and represent a paradigm shift for technology startups.
We urge you to examine whether OpenAI’s past practices are consistent with its obligations as a non-profit – most notably whether it has inappropriately depleted the assets of the non-profit by distributing assets to third-party entities. We also believe that Attorney General Bonta should take direct action to ensure that OpenAI’s charitable promise is kept.
We understand that Elon Musk and Shivon Zilis are currently seeking to represent the public interests in Musk v. Altman, No. 4:24-cv-04722-YGR (N.D. Cal.). Although we would also urge your office to take direct action, we believe that Mr. Musk and Ms. Zilis are qualified and well positioned to represent the interests of Californians in this matter.
We appreciate your consideration of our views and are happy to answer any questions you may have.
Respectfully,
Meta Platforms
