Meta Urges California AG to Block OpenAI's Transition

Meta Platforms has recently urged California's Attorney General, Rob Bonta, to prevent OpenAI from converting into a for-profit entity, as reported by the Wall Street Journal.

In a letter addressed to Bonta, Meta expressed concerns that such a move by OpenAI could set a precedent, allowing startups to benefit from nonprofit status until they are ready to turn a profit. This, Meta argues, could undermine the integrity of nonprofit structures and the advantages they offer.

Dangerous Precedent

Meta's letter warns that if OpenAI's new business model is deemed acceptable, it could lead to a situation where non-profit investors gain the same profit advantages as those investing in conventional for-profit companies, while still enjoying tax benefits.

The tech giant and the California AG's office have not yet responded to requests for comment from Reuters.

Legal Battles

Earlier, OpenAI sought a federal judge's rejection of billionaire Elon Musk's request to halt its conversion to a for-profit company. Musk, a former co-founder of OpenAI, sued the company and its CEO, Sam Altman, alleging they prioritized profits over public interest in their AI advancements.

Musk has since launched a competing AI company, xAI, further intensifying the industry's competitive landscape.

OpenAI's Position

OpenAI Chairman Bret Taylor stated that any potential restructuring would ensure the nonprofit continues to exist and thrive, receiving full value for its stake in the for-profit entity, with an enhanced ability to pursue its mission.

Meta's stance in this matter aligns with Musk's efforts to represent public interests in deciding whether OpenAI should be allowed to become a for-profit company.