New Era for AI: OpenAI's Restructuring

Published Date : 31/10/2025 

In late 2024, OpenAI completed a significant restructuring, transitioning to a for-profit entity. This move, despite facing legal and regulatory challenges, paves the way for increased investment and innovation in AI. 

In late 2024, OpenAI, still recovering from the tumultuous ousting of Sam Altman, initiated a process to convert to a more traditional for-profit business. This move was aimed at making the company more appealing to investors. However, the process was far from smooth.

Elon Musk, an OpenAI co-founder who had left to launch a rival startup, sued to block the restructuring, alleging it violated the company’s founding principles. The billionaire also made an unsuccessful bid to buy the nonprofit that controls OpenAI. Former OpenAI employees and nonprofit leaders also asked regulators to intervene. Meanwhile, OpenAI spent months in complex negotiations with Microsoft, its biggest backer, about how their partnership would change with the new corporate structure.

On Tuesday, roughly a year after starting the process, OpenAI announced the completion of the restructuring after signing a new agreement with Microsoft and making concessions to state regulators. Delaware Attorney General Kathy Jennings described the process as “a long and intensive negotiation.”

While OpenAI made compromises to finalize the restructuring, it marks a significant win that will pave the way for a new era of heightened investment in data centers, chips, and talent to support AI development. OpenAI has already committed to spending $1.4 trillion on infrastructure for AI, as Altman announced during a livestreamed event on Tuesday. Altman expects to continue moving aggressively on this front.

To finance this ambitious plan, OpenAI will need to raise unprecedented amounts of capital through venture funding, debt, and an eventual public offering. SoftBank, one of OpenAI’s biggest backers, had reserved the right to pull back billions in funding if OpenAI did not complete the restructure in the next few months. Other investors may also have been hesitant to invest large sums in a company with a complex nonprofit structure that complicated their financial returns.

“We’re finally almost just Normal Co., what I’ve been calling it internally,” OpenAI Chief Financial Officer Sarah Friar said in an on-stage interview Wednesday at a conference in Riyadh. The recent moves allow OpenAI to “continue to raise capital in a much less complex way,” she added.

However, many questions remain about the relationship between the nonprofit and for-profit entities. The key issue is how much influence the nonprofit will have over the for-profit. In theory, the nonprofit board can exercise control by hiring or firing members of the for-profit board. Practically, however, firing OpenAI’s for-profit directors may be difficult, given that all but one of the nonprofit board members also serve on the for-profit board. Two of the current nonprofit board members, Adam D’Angelo and chairman Bret Taylor, currently run AI businesses that use OpenAI’s software.

Nonprofit board members do not have the power to fire executives at OpenAI’s for-profit business, according to two people familiar with the matter, who spoke on condition of anonymity to discuss internal matters. This is a crucial detail, considering it was a different, smaller version of the nonprofit board that fired Altman two years ago, leading to chaos at the company.

“The current arrangement still fails to guarantee true independence or accountability to the public,” said Orson Aguilar, CEO of nonprofit LatinoProsperity, which is part of a coalition called EyesOnOpenAI that has led efforts to campaign against the restructuring. “We still have major concerns in terms of who’s in charge.”

It’s also unclear how the nonprofit will wield its considerable resources. It’s set to receive a 26% equity stake in the company, or about $130 billion at OpenAI’s current $500-billion valuation, as well as a warrant that entitles it to an undisclosed amount of additional shares if the for-profit’s share price grows more than tenfold after 15 years. The nonprofit plans to spend $25 billion on AI that can help health and efforts to minimize AI’s most severe risks. However, it has yet to name a CEO or any personnel.

“What we have now is the ability to actually deploy capital relatively quickly, and the structure before was not conducive to that at all,” OpenAI nonprofit board member Zico Kolter told Bloomberg on Tuesday. “The setup is quite a bit more aligned now in terms of ensuring the nonprofit benefits from the value that OpenAI is creating.”

Kolter is the lone nonprofit board director who will no longer serve as a voting member of the for-profit board, but rather just an observer. (Another will be added to that list within a year of the restructuring.) He also chairs OpenAI’s Safety and Security Committee, which has the authority to delay the company’s product releases if deemed unsafe.

“We want to ensure that the processes and the high standards that we hold ourselves to, that OpenAI holds themselves to when it comes to models, are in fact being realized,” Kolter said. “And when they are not, that we either catch it early or we react to it quickly.”

OpenAI’s relationship with Microsoft, which was foundational to the AI startup’s early success, remains complicated. While Microsoft has agreed to a 27% stake in OpenAI’s new for-profit entity, it’s less clear how the companies will determine the software giant’s ongoing access to OpenAI’s intellectual property.

OpenAI said an independent panel will play a key role by deciding when the company has reached artificial general intelligence, a more powerful form of AI that many tech companies are trying to develop. When that happens, Microsoft will no longer be entitled to 20% of OpenAI’s revenue nor will OpenAI have to provide Microsoft access to its latest AI research methods.

However, it’s murky how this panel will be selected and agreed upon by both companies, or what their criteria will be. In the meantime, it remains to be seen how Microsoft, increasingly a competitor with OpenAI, will use its access to OpenAI’s IP, including for things like data center and chip design, for its own benefit.

Finally, Musk shows no signs of giving up his fight against the restructure, even if that means having to undo it after the fact. “They steamrolled ahead, defying the Judge’s wish that the legality of this be fairly decided by a jury not by politicians,” Marc Toberoff, Musk’s lead attorney on the OpenAI case, told Bloomberg News. OpenAI, he said, “can hardly be heard to complain about the hardships of unwinding.” 

Frequently Asked Questions (FAQS): 

Q: What was the main reason for OpenAI's restructuring?

A: The main reason for OpenAI's restructuring was to transition to a for-profit entity, making it more appealing to investors and allowing for increased investment in AI development.

Q: Who opposed OpenAI's restructuring and why?

A: Elon Musk and former OpenAI employees opposed the restructuring, alleging it violated the company’s founding principles and raising concerns about accountability and independence.

Q: What concessions did OpenAI make to complete the restructuring?

A: OpenAI made concessions to state regulators and signed a new pact with Microsoft to complete the restructuring, ensuring the deal met regulatory requirements.

Q: How much will OpenAI spend on AI infrastructure?

A: OpenAI has committed to spending $1.4 trillion on infrastructure for AI, as announced by Sam Altman during a livestreamed event.

Q: What role will the nonprofit entity play in OpenAI's new structure?

A: The nonprofit entity will receive a 26% equity stake in the company and a warrant for additional shares. It plans to spend $25 billion on AI for health and minimizing risks, but it has yet to name a CEO or personnel. 

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