Meta Platforms has raised concerns over OpenAI’s plan to transition from a nonprofit to a for-profit entity, urging California Attorney General Rob Bonta to intervene. In a letter first reported by The Wall Street Journal, Meta argues that OpenAI’s actions could set a dangerous precedent for Silicon Valley startups, allowing them to leverage nonprofit benefits before shifting to for-profit models.

Meta's letter claims that OpenAI is using assets developed under its nonprofit structure for potential private gains, which could disrupt traditional startup funding norms. "Failing to hold OpenAI accountable... could lead to a proliferation of ventures that are notionally charitable until they become profitable," Meta wrote.

The dispute arises as OpenAI, initially founded as a nonprofit in 2015, seeks to convert to a for-profit model to attract investors. The company has already raised billions, driven by the success of ChatGPT, a generative AI tool that generates significant revenue. CEO Sam Altman has stated the shift is necessary to fund OpenAI’s ambitious goals, including advancing artificial general intelligence (AGI).

Meta’s concerns highlight a broader debate about ethics in tech. “OpenAI’s conduct could have seismic implications for Silicon Valley,” Meta stated. It warned that other startups might follow suit, using nonprofit structures to attract tax-free donations before transitioning to for-profit entities.

Elon Musk, co-founder of OpenAI and now one of its critics, has also voiced opposition to the company’s trajectory. Musk and former OpenAI board member Shivon Zilis are currently involved in a lawsuit against OpenAI, alleging mismanagement of its nonprofit obligations. In its letter, Meta suggested Musk is "well positioned to represent the interests of Californians" in this matter.

In response, OpenAI board chair Bret Taylor emphasized that any restructuring would ensure the nonprofit's mission remains intact. Taylor stated that OpenAI’s board is consulting legal and financial advisors to guarantee compliance with regulations while advancing its mission of ensuring AGI benefits humanity.

Meta's opposition also reflects competitive tensions. As a direct rival in the AI space, Meta is positioning its Meta AI assistant as a dominant player. CEO Mark Zuckerberg’s focus on building AI superintelligence parallels OpenAI’s goals, intensifying the rivalry.

This controversy underscores the rapidly evolving dynamics of the AI industry, where ethical questions and competitive pressures intersect. OpenAI’s transition could redefine how startups balance innovation, ethics, and profitability.

THEVERGE