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OpenAI’s Nonprofit Legitimacy Challenged by Public Citizen

Public Citizen, a consumer group, wants California to investigate if OpenAI's nonprofit truly controls its for-profit partner.


Public Citizen has approached the California Attorney General's office seeking an investigation into the nonprofit status of . The consumer advocacy group expresses concerns over whether the nonprofit branch is truly governing the actions and interests of its for-profit counterpart, as originally intended when their dual structure was established in 2019.

Governance Controversies and Structure

OpenAI operates as two separate legal entities: OpenAI Nonprofit and OpenAI LP, which is a for-profit enterprise allegedly under complete control of the nonprofit's board. Governance issues came to the public eye when CEO Sam Altman was ousted and then reinstated in a contentious boardroom shuffle. During this period, allegiance to for-profit motives seemingly outweighed nonprofit principles, leading to speculation that the for-profit wing was exerting dominant control.

Microsoft's Role and Nonprofit Dissolution

, a substantial investor in OpenAI, played a part in these governance affairs, having temporarily employed both and President . Although Public Citizen has not directly implicated Microsoft in its complaint, the tech giant's financial involvement and nonvoting board status blur the clarity of the nonprofit's governance. Precedent for dissolving a nonprofit entity exists, as seen with Blue Cross California's conversion to a for-profit, which resulted in the creation of two charitable foundations. Public Citizen suggests a similar outcome may be suitable for OpenAI if the allegations prove true.

Robert Weissman, president of Public Citizen, elaborates on the organization's stance, stating the concern isn't whether OpenAI LP holds considerable value but whether it's properly regulated by the nonprofit entity as required by California law. He suggests that if the for-profit arm is indeed leading the decision-making process, OpenAI may not be upholding its nonprofit obligations and could face dissolution.

Public Citizen, established by Ralph Nader, serves as a watchdog advocating for consumer rights and organizational transparency, particularly for entities registered as nonprofits. The outcome of their request to the California Attorney General remains to be seen as OpenAI now faces scrutiny regarding its operational and governance model.

Luke Jones
Luke Jones
Luke has been writing about all things tech for more than five years. He is following Microsoft closely to bring you the latest news about Windows, Office, Azure, Skype, HoloLens and all the rest of their products.

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