I know nothing about companies (esp. in the US), but I find it weird that a company can go from non-profit to for-profit? Surely this would be taken advantage of. Can someone explain me how this work?
In practice it’s doable though. You can just create a new legal entity and move stuff and/or do future value creating activity in the new co. IF everyone is on board with the plan on both sides of the move then that’s totally doable with enough lawyers and accountants
I'm wondering if OpenAI's charter might provide a useful legal angle. The charter states:
>OpenAI’s mission is to ensure that [AGI ...] benefits all of humanity.
>...
>We commit to use any influence we obtain over AGI’s deployment to ensure it is used for the benefit of all, and to avoid enabling uses of AI or AGI that harm humanity or unduly concentrate power.
>Our primary fiduciary duty is to humanity. We anticipate needing to marshal substantial resources to fulfill our mission, but will always diligently act to minimize conflicts of interest among our employees and stakeholders that could compromise broad benefit.
>...
>We are committed to doing the research required to make AGI safe, and to driving the broad adoption of such research across the AI community.
>We are concerned about late-stage AGI development becoming a competitive race without time for adequate safety precautions. [...]
>...
I'm no expert here, but to me, this charter doesn't appear to characterize OpenAI's behavior as of the year 2024. Safety people have left, Sam has inexplicably stopped discussing risks, and OpenAI seems to be focused on racing with competitors. My question: Is the charter legally enforceable? And if so, could it make sense for someone to file an additional lawsuit? Or shall we just wait and see how the Musk lawsuit plays out, for now?
I'm curious about the "fiduciary duty" part. As a member of humanity, it would appear that OpenAI has a fiduciary duty to me. Does that give me standing? Suppose I say that OpenAI compromises my safety (and thus finances) by failing to discuss risks, having a poor safety culture (as illustrated by employee exits), and racing. Would that fly?
Even if you donated to them, all states I know of assign sole oversight for proper management of those funds to the state AG. If you donate to a food bank and they use the money to buy personal Ferraris instead of helping the hungry, that's clearly illegal, but you'd be out the money either way, so you wouldn't have standing to sue. The attorney general has to sue for mismanagement of funds. If you feel OpenAI is violating their charter, I would definitely encourage writing to Mrs. Jennings to voice that opinion.
I don't know the laws of Delaware well, but I would be surprised if he has standing even as a donor.
The IRS isn’t stupid. The rules on what counts as taxable income and what the nonprofit can take tax-free have been around for decades.
https://www.propublica.org/article/how-the-irs-was-gutted (2018)
> An eight-year campaign to slash the agency’s budget has left it understaffed, hamstrung and operating with archaic equipment. The result: billions less to fund the government. That’s good news for corporations and the wealthy.
You sign an exclusive, non-revocable licensing agreement. Ownership of the original IP remains 100% with the original startup.
Now, this only works if the non-profit's board is on-board.
I think the real issue Musk was complaining about is that sama is quickly becoming very wealthy and powerful and Musk doesn't want any competition in this space.
Hopefully some people watching all this realize that the people running many of these big AI related projects don't care about AI. Sam Altman is selling a dream about AGI to help make himself both wealthier and more powerful, Elon Musk is doing the same with electric cars or better AI.
People on HN are sincerely invested in the ideas behind these things, but it's important to recognize that the people pulling the strings largely don't care outside how it benefits them. Just one of the many reasons, at least in AI, truly open source efforts are essential for any real progress in the long run.
There's a lot of jurisdiction around preventing this sort of abuse of the non-profit concept.
The reason why the people involved are not on trial right now is a bit of a mystery to me, but could be a combination of:
* Still too soon, all of this really took shape in the past year or two.
* Only Musk has sued them, so far, and that happened last month.
* There's some favoritism from the government to the leading AI company in the world.
* There's some favoritism from the government to a big company from YC and Sam Altman.
I do believe Musk's lawsuit will go through. The last two points are worth less and less with time as AI is being commoditized. Dismantling OpenAI is actually a business strategy for many other players now. This is not good for OpenAI.
Which ones exactly?
NVIDIA is drinking sweet money from OpenAI.
Microsoft & Apple are in cahoots with it.
Meta/Facebook seems happy to compete with OpenAI on a fair playing field.
Anthropic lacks the resources.
Amazon doesn't seem to care.
Google is asleep.
NVIDIA makes money from any company doing AI. I would be surprised if OpenAI was a whole digit percentage of their revenue.
>Microsoft & Apple are in cahoots with it.
Nope. Apple is using OpenAI to fill holes their current model is not good at. This doesn't sound like a long-term partnership.
>Meta/Facebook seems happy to compete with OpenAI on a fair playing field.
They want open source models to rule, obliterating proprietary models out of existence, while at it.
>Anthropic lacks the resources.
Hence why it would be better for them if OpenAI would not exist. It's the same with all other AI companies out there.
>Amazon doesn't seem to care.
Citation needed, AWS keeps putting out products which are their market leaders, they just don't make a big fuzz about it.
>Google is asleep.
I'll give you this one. I have no idea why they keep Pichai around.
As opposed to? The euphemism "I wouldn't be surprised" usually means you think what you're saying. If you negate that you're saying what you _don't_ think is the case? I may be reading too much into whats probably a typo.
It is not publicly known how much revenue Nvidia gets from OpenAI, but it is likely more than 1%, and they may be one of the top 4 unnamed customers in their 10Q filing, which would mean at least 10% and $3 billion [0].
That's not nothing.
[0] https://www.yahoo.com/tech/nvidia-gets-almost-half-revenue-0...
OpenAI is miles ahead in terms of ecosystem and platform integration. Google can come up with long context windows and cool demos all they want, OpenAI built a lot of moat while they were busy culling products :)
I didn't realise it was that bad.
Amazon gets paid either way, because even if open ai doesn’t use them, where are you going to cloud your api that’s talking with open ai?
If open ai looks weakened I think we’ll see everyone else has a service they want you to try. But there’s no use in making much noise about that, especially during an election year. No matter who wins, all the rejected everywhere will blame AI, and who knows what that will look like. So, sit back and wait for the leader of the pack to absorb all the damage.
As OpenAI found its product-market fit, the early visionaries are not needed anymore (although I'm sure the people working there are still amazing)
most would happily sell their soul and deal with any mess to reach $150B valuation
I feel like this is quite a slippery slope, though. Should we also give small companies a right to violate trademarks? Copyright? Kill people? These could also give them a chance to compete against big players.
And, most importantly: non-profit charities (not the only kind of nonprofit, but presumably what OpenAI was) are legally obligated to operate “for the public good”. That’s why they’re tax exempt: the government is basically donating to them, with the understanding that they’re benefiting the public indirectly by doing so, not just making a few people rich.
In my understanding, this is just blatant outright fraud that any sane society would forbid. If you want to start a for-profit that’s fine, but you’d have to give away the nonprofit and its assets, not just roll it over to your own pocketbook.
God I hope Merrick Garland isn’t asleep at the wheel. They’ve been trust busting like mad during this administration, so hopefully they’re taking aim at this windmill, too.
Little chance of that as Sama is a big time Democrat fundraiser and donor.
Can’t find a good source for both rn but this one has alphabet in the top 50 nationwide for this election: https://www.opensecrets.org/elections-overview/top-organizat...
edit: and Sam Altman isn’t exactly donating game changing amounts — around $300K in 2020, and seemingly effectively nothing for this election. That’s certainly nothing to sneeze at as an individual politician, but that’s about 0.01% of his net worth (going off Wikipedia’s estimate of $2.8B, not counting the ~$7B of OpenAI stock coming his way).
https://www.dailydot.com/debug/openai-sam-altman-political-d...
When you see any numbers for corporations contributing to political campaigns, that's actually just measuring the contributions from the employees of those corporations. That's why most corporations "donate to both parties"--because they employ both Republicans and Democrats.
Name names. We can look it up.
Again, I am not a lawyer but that makes no sense. Otherwise, anyone can claim the non-profit? So clearly there are some beneficial owners out there somehow.
1: In principle; in practice, well, we'll see with this one!
Obviously we all think of the NFL as a big money organisation, but it basically just organises the fixtures and the referees. The teams make all the money.
They pay dividends to the teams, however, yes. But all that revenue (which is distinct from team revenue) is actually legally earned by the NFL itself.