Meta Platforms is urging California's attorney general to intervene and prevent OpenAI from turning into a for-profit company. This follows a series of legal battles, including OpenAI's response to a lawsuit filed by billionaire Elon Musk. According to the Wall Street Journal, Meta's letter to Attorney General Rob Bonta on Thursday raises concerns that OpenAI's transformation would create a dangerous precedent, allowing startups to enjoy nonprofit benefits until they are on the brink of profitability.
Earlier this month, Musk asked a federal court in California to block OpenAI’s efforts to shift from a nonprofit to a fully for-profit entity. On Friday, OpenAI filed a legal response, accusing Musk of attempting to disrupt the company’s plans to pursue a profit-driven model while he builds a competing AI business, xAI. OpenAI’s filing argued that Musk’s actions would harm its business, mission, and board decisions, ultimately benefiting his own company.
OpenAI also published emails and text messages with Musk to show that he initially supported its shift to a for-profit structure before stepping away from the company. According to OpenAI, Musk walked away after failing to secure a majority stake and control.
In its letter, Meta warned that allowing OpenAI to convert into a for-profit organization could have significant consequences for Silicon Valley. Meta highlighted the risk that nonprofit investors could reap the benefits of for-profit gains while still enjoying tax write-offs. It cautioned that this would give an unfair advantage to startups, undermining the foundations of for-profit investment.
Elon Musk’s legal battle with OpenAI began in August when he sued the company and its CEO Sam Altman, claiming they prioritized profits over the public good in their pursuit of AI development. Musk later asked U.S. District Judge Yvonne Gonzalez Rogers to block the conversion, arguing that it violated the principles of the nonprofit structure.
Despite the legal disputes, OpenAI has reassured the public that it plans to maintain its nonprofit mission even as it embraces a for-profit model. In a statement, OpenAI chairman Bret Taylor explained that any restructuring would not jeopardize the nonprofit’s existence and would enhance its ability to continue pursuing its core mission.
As Musk's xAI grows as a competitor, tensions between the two companies are likely to intensify. OpenAI continues to push back against Musk’s legal claims and is prepared to defend its decision in court.