OpenAI is facing growing political pressure in California as state regulators and advocacy groups question its high-stakes restructuring plan, raising concerns that the company’s future as a for-profit enterprise could be in jeopardy.
“We continue to work constructively with the offices of the Attorneys General of California and Delaware,” an OpenAI spokesman said, adding that the company intends to create “one of the best-resourced nonprofits in history,” reports The Wall Street Journal on Tuesday.
He emphasized that OpenAI has no plans to leave California, though executives have discussed relocation as a last-resort option if the restructuring is blocked.
The company, led by Chief Executive Sam Altman, is currently controlled by a nonprofit parent and operates as a subsidiary that does not issue traditional equity. That model has frustrated investors, who want more conventional ownership rights.
OpenAI’s financial backers have conditioned about $19 billion, or nearly half of its funding over the past year, on receiving shares in the new for-profit company. Without the conversion, investors could pull funding, jeopardizing OpenAI’s ability to finance large data centers, design custom chips, and keep pace in the global AI race.
California and Delaware attorneys general are investigating the proposal and have the authority to sue the company for potentially violating nonprofit law or require settlements as a condition of approval.
