In a letter addressed to California Attorney General Rob Bonta, Meta has expressed concern over OpenAI’s plan to transition from a non-profit to a for-profit entity. The tech giant argues that OpenAI should not be allowed to reap enormous private gains by reappropriating assets it built as a charity.
Meta’s Concerns
According to the letter, Meta believes that OpenAI’s proposed conversion could have seismic implications for Silicon Valley and represent a paradigm shift for technology startups. By allowing non-profit investors to benefit from tax write-offs and eventually assume for-profit status, OpenAI’s new business model would distort the market.
OpenAI’s Origins
OpenAI was founded as a non-profit in 2015 with the mission of developing safe and broadly beneficial artificial intelligence (AGI) without commercial pressures. The company initially relied on public donations to further its research and development efforts.
Meta’s Argument
In the letter, Meta argues that OpenAI is attempting to circumvent the law by taking advantage of its non-profit status and then reappropriating assets for potentially enormous private gains. The tech giant claims that this behavior could lead to a proliferation of similar start-up ventures that are notionally charitable until they are profitable.
Consequences of OpenAI’s Conversion
If OpenAI is allowed to convert to a for-profit entity, it would essentially require any startup seeking to remain competitive to adopt the same playbook. This would result in non-profit investors benefiting from tax write-offs and eventually assuming for-profit status, creating a distorted market.
Meta Supports Musk’s Fight Against OpenAI
The letter also highlights Meta’s support for Elon Musk’s fight against OpenAI. Meta believes that Musk is "qualified and well positioned to represent the interests of Californians in this matter" due to his early roles in OpenAI’s creation and operations.
Conclusion
Meta is committed to openness and transparency in the field of AI. The company argues that OpenAI’s charitable promise to develop safe and broadly beneficial AGI should be kept, and it should not be allowed to reappropriate assets built as a charity for private gains.
Letter from Meta to California Attorney General Rob Bonta
[Full letter below]
Dear Mr. Bonta,
Re: Concerns regarding OpenAI’s proposed conversion from non-profit to for-profit entity
We are writing to express our concerns over OpenAI’s plan to transition from a non-profit to a for-profit entity. As a company that is committed to openness and transparency in the transformative field of AI, we believe it is essential to highlight the potential implications of this change.
OpenAI was founded as a non-profit with the mission of developing safe and broadly beneficial AGI without commercial pressures. The company initially relied on public donations to further its research and development efforts. However, OpenAI now wants to change its status while retaining all of the benefits that enabled it to reach the point it has today.
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. Furthermore, we would also like to see an investigation into whether OpenAI’s proposed conversion represents not simply a future, potential abuse of corporate form.
The implications of OpenAI’s conduct could have seismic effects on Silicon Valley and represent a paradigm shift for technology startups. If permitted, OpenAI’s restructuring would only 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 its technology becomes commercially viable.
This would distort the market by essentially requiring any startup seeking to remain competitive to adopt the same playbook. Non-profit investors would get 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.
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.
Given the breakneck speed at which OpenAI is continuing its for-profit conversion, this is a special case with an urgent necessity for action. We appreciate your consideration of our views and are happy to answer any questions you may have.
Respectfully,
Meta Platforms