OPENAI SCRAPS PLANS TO TRANSFORM INTO FOR-PROFIT COMPANY

SAN JOSÉ, CALIFORNIA  May 6 (Bernama-dpa) -- ChatGPT inventor OpenAI has reversed course on plans to transform into a for-profit company, announcing on Monday that it will remain under the control of its original non-profit entity, German Press Agency (dpa) reported.

The decision follows consultations with state attorneys general in California and Delaware, who could have moved to block the restructuring.

"OpenAI was founded as a nonprofit, and is today overseen and controlled by that nonprofit. Going forward, it will continue to be overseen and controlled by that nonprofit," the company said in a statement.

The reversal raises questions about the future of OpenAI's funding structure. Major investors, including Japan's SoftBank, had backed the company on the condition that it would transition to a profit-driven model by the end of the year.

Chief executive and co-founder Sam Altman told reporters on a call on Monday that SoftBank had no plans to reduce its funding.

Microsoft, which has invested almost US$14 billion in the company, has not officially commented on the new plan.

The profit-oriented restructuring was originally intended to attract more investors as competition in the artificial intelligence (AI) sector intensified. It came after a period of turmoil in late 2023, when OpenAI's board abruptly fired Altman, only to reinstate him weeks later following pressure from investors and staff.

The decision marks a victory for Elon Musk, an OpenAI co-founder, who now runs rival AI firm xAI. Musk, a vocal critic of the profit shift, has previously taken legal action to block the transformation.

-- BERNAMA-dpa