Meta asks California AG to block OpenAI’s switch from non-profit to for-profit

Dear General Bonta:

 As a California company that produces Generative AI technology, Meta Platestablishs, Inc. (“Meta”) is proset uply worryed about OpenAI’s try to shed the non-profit status under which it was set uped in order to set up a for-profit entity. We encourage you to appraise this presentd transaction, including the nature and timing of any transfer of assets from OpenAI’s non-profit entity to other entities. Failing to helderly OpenAI accountable for its choice to establish as a non-profit could direct to a escalate of analogous commence-up ventures that are notionpartner charitable until they are potentipartner profitable. The People of California have straightforward and encouragent interests in stopping this behavior. All for-profit activities of OpenAI and its roverdelighted entities should be paemployd to shield dispenseors and users aenjoy.

In 2015, OpenAI filed its innovative certificate of incorporation with the State of Delconscious, which reads:

This Corporation shall be a nonprofit corporation systematic exclusively for charitable and/or educational purposes wiskinny the uncomardenting of section 501(c){3) of the Internal Revenue Code of 1986, as amfinished, or the correacting provision of any future United States Internal Revenue law. The definite purpose of this corporation is to provide funding for research, growment and distribution of technology roverdelighted to man-made intelligence… The corporation is not systematic for the personal acquire of any person… The property of this corporation is irrevocably pledgeted to the[se] purposes… and no part of the net income or assets of this corporation shall ever inure to the advantage of any straightforwardor, officer or member thereof or to the advantage of any personal person.

OpenAI redeclareed this pledgement on its very own website years tardyr:

Seeing no clear path in the accessible sector, and given the success of other driven projects in personal industry, [OpenAI] determined to chase this project thcdisesteemful personal uncomardents bound by strong pledgements to the accessible excellent. [OpenAI] initipartner apshowd a 501(c)(3) would be the most effective vehicle to straightforward the growment of safe and expansively beneficial AGI while remaining unencumbered by profit incentives.

Taking advantage of this non-profit status, OpenAI elevated billions of dollars in capital from dispenseors to further its purported leave oution. The company recurrented to the State of California and the world that it would be run without any profit motivation. Investors and the accessible rightfilledy relied on that assurance. 

Now, OpenAI wants to alter its status while upgrasping all of the advantages that allowd it to achieve the point it has today. That is wrong. OpenAI should not be permited to flout the law by taking and reappropriating assets it built as a charity and using them for potentipartner enormous personal acquires. 

Moreover, OpenAI’s presentd conversion recurrents not sshow a future, potential mistreatment of corporate establish. We would also encourage you to study whether OpenAI’s past trains are reliable with its obligations as a non-profit – most notably whether it has inappropriately draind the assets of the non-profit by distributing assets to third-party entities.  

OpenAI’s direct could have seismic implications for Silicon Valley. If permitted, OpenAI’s restructuring would recurrent a paradigm shift for technology commenceups; permiting this restructuring would only entice dispenseors to begin organizations as non-profits, accumulate hundreds of millions of dollars in tax-free donations to help research and growment, and then presume for-profit status as its technology becomes commercipartner viable.

Indeed, if OpenAI’s novel business model is valid, non-profit dispenseors would get the same for-profit upside as those who dispense the traditional way in for-profit companies while also advantageing from tax write-offs bestowed by the rulement and, ultimately, the accessible. That would distort the taget by essentipartner requiring any commenceup seeking to remain competitive to adselect the same joinbook. 

We understand that Elon Musk and Shivon Zilis are currently seeking to recurrent the accessible interests in Musk v. Altman, No. 4:24-cv-04722-YGR (N.D. Cal.). Although we would also encourage your office to apshow straightforward action, we apshow that Mr. Musk and Ms. Zilis are qualified and well positioned to recurrent the interests of Californians in this matter. Their timely, set upational roles in OpenAI’s creation and operations and as prior members of its Board position them to understand better than anyone what OpenAI was intfinished to be and how its current direct separates from its charitable leave oution.

Meta is pledgeted to uncoverness and transparency in the alterative field of AI. OpenAI’s charitable promise to grow safe and expansively beneficial AI free from commercial presstateives is an transport inant one, and it should be kept. Given the fractureneck speed at which OpenAI is continuing its for-profit conversion, this is a distinctive case with an encouragent necessity for action.

We appreciate your ponderation of our watchs and are greetd to answer any asks you may have.

Respectfilledy,

Meta Platestablishs