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OpenAI to become for-profit company

reuters.com

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Re: OpenAI to become for-profit company

#431

Earlier quoted context omitted.

If information is publicly available to be read by humans, I fail to see any reason why it wouldn't be also available to be read by robots. Update: ML doesn't copy information. It can merely memorise some small portions of it.

Do a thought process. Should you and your friends be able to go to a public library with a van full of copiers with each one of you take a book and run to the van to make a copy? And you are doing it 24/7.

This metaphor is quite stretched.

A more fitting metaphor would be something like... If you had the ability to read all the books in the library extremely quickly, and to make useful mental connections between the information you read such that people would come to you for your vast knowledge, should you be allowed in the library?

Re: OpenAI to become for-profit company

#432
post #43
post #20

I know nothing about companies (esp. in the US), but I find it weird that a company can go from non-profit to for-profit? Surely this would be taken advantage of. Can someone explain me how this work?

That was the point musk was complaining about. In practice it’s doable though. You can just create a new legal entity and move stuff and/or do future value creating activity in the new co. IF everyone is on board with the plan on both sides of the move then that’s totally doable with enough lawyers and accountants

> That was the point musk was complaining about.

I think the real issue Musk was complaining about is that sama is quickly becoming very wealthy and powerful and Musk doesn't want any competition in this space.

Hopefully some people watching all this realize that the people running many of these big AI related projects don't care about AI. Sam Altman is selling a dream about AGI to help make himself both wealthier and more powerful, Elon Musk is doing the same with electric cars or better AI.

People on HN are sincerely invested in the ideas behind these things, but it's important to recognize that the people pulling the strings largely don't care outside how it benefits them. Just one of the many reasons, at least in AI, truly open source efforts are essential for any real progress in the long run.

Re: OpenAI to become for-profit company

#433

Earlier quoted context omitted.

If the assets were sold to the for profit at a fair price I could see this being legal (even if it shouldn't be). At least in that case the value generated by the non-profit tax free would stay locked up in non-profit land. The biggest problem with this is that there's basically no chance that the sale price of the non-profit assets is going to be $150 billion, which means that whatever the gap is between the valuati…

For-profit startups don’t pay taxes while growing either, because they aren’t making any profit during that phase.

Corporate tax is always only paid on profit and is usually a minor part of the tax draw for the government from corporations of all sizes.

The vast majority of taxes paid in developed nations are employee taxes and whatever national+local sales taxes and health/pension equivalent taxes are (indirectly) levied (usually 60-80% of national income). Asset taxes are a bit different.

It's true even in the bootstrapped company case: If you earn say $100k and keep $50k after all the employee indirect/direct taxes. Now imagine you spend $40k of that $50k in savings, setting up a business. You spend $30k on another employee, paying $15k of employer and employee taxes, and spend the other $10k on a company to do marketing (who will spend $5k of that on employees and pay $2.5k of tax), and you earn less than $40k in income, by the end of year 1 you have:

1) A loss-making startup which nonetheless is further along then nothing

2) Out of $100k of your original value, $67.5k has already reached the government within 12 months

3) Your time doing the tech side was not compensated but could not (for obvious anti-fraud reasons) be counted as a loss and as you have noted, you don't pay tax when you make a loss, and you don't get any kind of negative rebate (except certain sales tax regimes or schemes).

If you are in the US, the above is currently much worse due to the insane way R&D Software spend needs to be spread immediately as a tax burden.

So it's really not fair to say a new startup isn't paying taxes. They almost always are. There are very few companies or startups that pay less than 50% of their income to staff, and almost all of those are the unicorns or exceptional monopoly/class leaders. Startups, and founders tend to disproportionately give more of their income and are essentially to that extent re-taxed.

Even though you saved the money in order to start a startup, and paid your due employee taxes, you then have to pay employee taxes to use it, etc.

Re: OpenAI to become for-profit company

#434
post #394

And suddenly Altman's firing no longer seems so crazy

"suddenly"?

I was under the impression that most people saw this coming years ago. The second "Open"AI refused to release the weights for GPT-2 for our "safety" (we can see in hind sight how obviously untrue this was, but most of us saw it then too) it was clear that they were headed towards profitability.

Re: OpenAI to become for-profit company

#435

Earlier quoted context omitted.

> it's hugely beneficial to our species. Perhaps the biggest “needs citation” statement of our time.

It does not need a citation. There is no citation. What it needs, right now, is optimism. Optimism is not optional when it comes to doing new things in the world. The "needs citation" is reserved for people who do nothing and chose to be sceptics until things are super obvious. Yes, we are clearly talking about things to mostly still come here. But if you assign a 0 until its a 1 you are just signing out of advancing…

The company spearheading AI is blatantly violating its non-profit charter in order to maximize profits. If the very stewards of AI are willing to be deceptive from the dawn of this new era, what hope can we possibly have that this world-changing technology will benefit humanity instead of funneling money and power to a select few few oligarchs?

Re: OpenAI to become for-profit company

#436

I’m confused by this news story and the response here. No one seems to understand OpenAI’s corporate structure or non profits at all. My understanding: OpenAI follows the same model Mozilla does. The nonprofit has owned a for-profit corporation called OpenAI Global, LLC that pays taxes on any revenue that isn’t directly in service of their mission (in a very narrow sense based on judicial precedent) since 2019 [1]. I…

> Almost every nonprofit that raises revenue outside of donations has to be structured more or less this way to pay taxes. I don't think that's true? A non-profit can sell products or services, it just can't pay out dividends.

If those products and services are unrelated business income, they have to pay taxes on it: https://www.irs.gov/charities-non-profits/unrelated-business...

What counts as “related” to the charity’s mission is fuzzy but in practice the courts have been rather strict. They don’t have to form for-profit subsidiaries to pay those taxes but it helps to derisk the parent because potential penalties include loss of nonprofit status.

For example, the nonprofit Metropolitan Museum of Modern Art has a for-profit subsidiary that operates the gift shop. National Geographic Society has National Geographic Partners which actually owns the TV channel and publishes the magazine. Harvard and Stanford have the Harvard Management Company and Stanford Management Company to manage their endowments respectively. The Smithsonian Institute has Smithsonian Enterprises. Mayo Clinic => Mayo Clinic Ventures. Even the state owned University of California regents have a bunch of for-profit subsidiaries.

Re: OpenAI to become for-profit company

#437

I’m confused by this news story and the response here. No one seems to understand OpenAI’s corporate structure or non profits at all. My understanding: OpenAI follows the same model Mozilla does. The nonprofit has owned a for-profit corporation called OpenAI Global, LLC that pays taxes on any revenue that isn’t directly in service of their mission (in a very narrow sense based on judicial precedent) since 2019 [1]. I…

“Decoupling” is such a strange euphemism for removing an asset worth north of $100b from a nonprofit.

OpenAI Global LLC is the $100b asset. It’s not being removed, the nonprofit will still own all the shares it owns now until it decides to sell.
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