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OpenAI to become for-profit company

reuters.com

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Re: OpenAI to become for-profit company

#631

Post by 23B1 »

educasean wrote: post #546
shprd wrote: post #541

Earlier quoted context omitted.

> Who are the weak being "sacrificed"? The work of artists, authors, etc. I know currently the legal situation is messy, but that's exactly the point, anyone who can't engage in lengthy legal battle and defend their position in court are being sacrificed. The companies behind LLMs are spending hundreds of millions of dollars in lobbying and exploiting loopholes. Let's be real without the data there wouldn't be LLMs,…

What about programmers? I never consented to have my code consumed by LLMs.

Yes. Your intellectual labor to the maximum degree possible will be exploited by "AI" companies who are anything but.

This is repackaging content, laundering it, and reselling it.

As others have noted, IP law has lots of problems; Sam Altman et al are exploiting the gap left between the speed of technology and law and using their own version of social good without waiting for the consent of those they're exploiting.

Re: OpenAI to become for-profit company

#632

Post by wubrr »

throwup238 wrote: post #352

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…

What leverage does Sam Altman have to get equity now? Does he personally have control over that decision?

Re: OpenAI to become for-profit company

#634

Post by blendergeek »

cdchn wrote: post #587
talldayo wrote: post #581

Earlier quoted context omitted.

To be honest, I would take a private space agency 7 days out of the week with that kind of capital. We have no fundamental proof that LLMs will scale to the intelligence levels that we imagine in our heads. The industry application for LLMs is even weaker than computer vision, and the public sentiment is almost completely against it. Sam's product is hype; eventually people are going to realize that Q* and Strawberry…

Private space agency and LLMs both seem like big industries going nowhere driven by sci-fi hopes and dreams.

Its interesting how first impressions can be so deceiving. The world's largest private space agency (SpaceX) has completely changed the game in rural internet connectivity. Once upon a time, large chunks of the US had no reliable high speed internet. SpaceX has brought high-speed low-latency internet to every corner of the globe, even the middle of the ocean and Antarctica. This isn't going nowhere even if it seems that way.

Re: OpenAI to become for-profit company

#635

Post by blendergeek »

sfblah wrote: post #602
cdchn wrote: post #587

Earlier quoted context omitted.

Private space agency and LLMs both seem like big industries going nowhere driven by sci-fi hopes and dreams.

Not sure I agree with you here. I use LLMs all the time for work. I've never once used a space agency for anything.

My Dad uses SpaceX to work from home every day.

Re: OpenAI to become for-profit company

#637

Post by bbor »

throwup238 wrote: post #616
bbor wrote: post #599

Earlier quoted context omitted.

Good questions! Right now, OpenAI, Inc. (California non-profit, lets say the charity ) is the sole controlling shareholder of OpenAI Global LLC (Delaware for-profit, lets say the company ). So, just to start off with the big picture: the whole enterprise was ultimately under the sole control of the non-profit board, who in turn was obligated to operate in furtherance of "charitable public benefit". This is what the l…

> I'm personally dubious about the specific claims you made about revenue, but that's hard to find info on, and not the core issue. The core issue was that they were obligated (not just, like, promising) to direct all of their actions towards the public good, and they're abandoning that to instead profit a few shareholders, taking the fruit of their financial and social status with them. They've been making some mone…

Thanks for another polite response! I think this is the fundamental misunderstanding:

   What assets were gifted, exactly? ...It's currently a useless appendage and will never have any real power or resources until either OpenAI is in the black and sending profit up to it, or they can sell OpenAI shares.
The charity will gift its control of a $100B company for some undisclosed "minority stake" (via a complex share dilution scheme), in exchange for nothing other than "the people we're gifting it to have promised to do good with it". It's really that simple. The charity never was intended to draw profit from the for-profit, and the "never have any real power" contention is completely inaccurate -- they have direct, sole control over the whole enterprise.

  This restructuring opens the way for the nonprofit to sell its shares and it's going to be a hell of a lot of money to dedicate towards their mission
Even putting aside the core issue above (they won't have many shares to sell), the second part of my comment comes back here: what would they buy with all that money? Anthropic? Their explicit mission is to beat for-profit firms in the race to AGI so convincingly that an arms race is avoided. How could they possibly accomplish this after gifting/selling away control of the most capable AI system on the planet?

Finally, one tiny side point:

  Courts are very strict in their interpretation of what "unrelated business income" is and the for-profit LLC protects the non-profit's tax exempt status.
I'm guessing you're drawing on much more direct experience than I am and I don't question that, but this seems like a deceptive framing. Normal charities have no issues with unrelated business income, because they don't run "trades or businesses", they just spend their money. I know that selling ChatGPT subscriptions is a large income source, but it's far from the only way to pursue their mission -- and is wildly insufficient, anyway. They in no way were forced to do it to meet their obligations.

Again, I'm a noob, so I'll cite the IRS-for-dummies page on the topic for onlookers: https://www.irs.gov/charities-non-profits/unrelated-business...

Re: OpenAI to become for-profit company

#639

Post by mminer237 »

throwup238 wrote: post #413
mminer237 wrote: post #137

Earlier quoted context omitted.

If the non-profit is on board with that though, then they're breaking the law. The IRS should reclassify them as a for-profit for private inurement and the attorney general should have the entire board removed and replaced.

OpenAI Global, LLC - the entity that actually employs all the engineers, makes revenue from ChatGPT and the API, and pays taxes - has been a for-profit corporation since at least 2019: https://en.wikipedia.org/wiki/OpenAI#2019:_Transition_from_n... The IRS isn’t stupid. The rules on what counts as taxable income and what the nonprofit can take tax-free have been around for decades.

Still, if the non-profit has private inurement, the non-profit shouldn't be able to take anything tax-free as it wouldn't qualify as a 501(c)(3). The bigger issue is definitely Delaware non-profit law though.

Re: OpenAI to become for-profit company

#640

Post by kranke155 »

e-clinton wrote: post #638

So many red flags about Saltman. I have to imagine some of the investors are having second thoughts.

Some number must be people who only care about winning like Sam. Plus they're getting huge returns.

I get strong "next Mark Zuckerberg" vibes from Sam. Build a zombie product that approaches worthlessness after a few years, but made himself hugely rich in the process, and buys off tech and people as needed to maintain some kind of relevance.

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