OpenAI’s non-profit arm netted less than $45,000 last year
OpenAI’s non-profit arm reported revenues of just $44,485 in its latest US tax filing, despite its for-profit business likely making millions from ChatGPT.
Founded in 2015, the startup was initially a non-profit organization focused on developing AI for the benefit of humanity. In 2019, it spun out a for-profit side led by CEO Sam Altman and began building commercial products, leading some to question whether the outfit’s employees had become more interested in making money than building safe AI.
In its latest Form-990 document, the non-profit unit is revealed as technically exempt from paying income tax and submitting audited financial statements for 2022 as it made less than the $2 million limit that triggers additional reporting requirements. Meanwhile, its larger for-profit side, however, could reportedly reach a valuation of $90 billion.
Earlier this year, Microsoft invested $10 billion for a 49 percent stake into the company. OpenAI reiterated at the time that it was still governed by its non-profit side.
While our partnership with Microsoft includes a multibillion-dollar investment, OpenAI remains an entirely independent company governed by the OpenAI Nonprofit. Microsoft is a non-voting board observer and has no control. And, as explained above, [artificial general intelligence] AGI is explicitly carved out of all commercial and IP licensing agreements, the org previously stated.
Private investors have pledged to invest billions of dollars into OpenAI, despite its governance through a non-profit arm. This has raised concerns among industry experts about the transparency and accountability of the organization.
In remarks shared with CNBC, Mozilla Foundation’s President Mark Surman pointed out OpenAI’s corporate structure and called for more transparency. He stated, I don’t know at this point that this is a regulatory oversight issue. I think this is a public trust issue. If they want to be seen as this public institution making sure AI is in the service of humanity, we need a lot more transparency. We need to know what’s going on.
OpenAI’s organizational structure and relationship with Microsoft is also being investigated by trade regulators. The UK’s Competition and Markets Authority and the US Federal Trade Commission recently expressed their interest in determining whether OpenAI’s partnership with Microsoft constitutes a merger and whether it violates antitrust laws.
The revenue generated by OpenAI’s for-profit business remains unspecified, but it is reported to have reached $28 million last year. It is possible that the company experienced rapid growth in 2023 with the release of GPT-4, its latest large language model that powers its most advanced version of ChatGPT, which is being sold to subscribers and enterprises.
OpenAI is known for its commitment to developing AI that benefits humanity, but the complex structure of the organization raises questions about its motives and how it balances its non-profit and for-profit goals. Transparency and accountability are crucial factors in maintaining public trust.
The Register has reached out to OpenAI for comment on these matters.
OpenAI’s unique position at the intersection of non-profit and for-profit ventures has caught the attention of regulators who are now investigating its relationship with Microsoft to ensure fair competition and compliance with antitrust laws. The outcome of these investigations will have significant implications for the future of OpenAI and the development of AI technology.
As OpenAI continues to navigate this complex landscape, it faces the challenge of balancing its mission to serve humanity with the demands and potential profits of the commercial market. The organization’s ability to address these concerns and provide greater transparency will be crucial in maintaining the trust and support of the public.
