Meta Platforms, Inc. (“Meta”), a California-based Generative AI technology company, has expressed deep concern to California Attorney General Rob Bonta regarding OpenAI’s transition from a non-profit to a for-profit entity. Meta urges a thorough review of this transition, particularly focusing on the transfer of assets from the non-profit entity to other entities, emphasizing the potential for this case to set a detrimental precedent for future startups. Meta argues that allowing OpenAI to retain the benefits accrued during its non-profit status while transitioning to for-profit operations is unjust and could incentivize other ventures to exploit a similar model, thereby undermining the integrity of charitable organizations and disadvantaging traditional for-profit companies. They call for a halt to OpenAI’s for-profit activities pending investigation to protect both investors and consumers.
Meta highlights OpenAI’s initial commitment to its non-profit status, citing its 2015 Delaware certificate of incorporation, which explicitly states its dedication to charitable and educational purposes under section 501(c)(3) of the Internal Revenue Code. This document underlines OpenAI’s pledge to operate without private gain, with its assets irrevocably dedicated to its stated mission. Meta further emphasizes OpenAI’s public reaffirmation of this commitment years later, wherein the organization justified its non-profit structure as the most effective way to develop safe and beneficial artificial general intelligence (AGI) free from profit-driven influences. Meta contends that OpenAI leveraged this non-profit status to secure billions of dollars in investments, assuring investors and the public of its non-profit mission.
Meta argues that OpenAI’s current attempt to transition to a for-profit model while retaining the benefits accrued under its non-profit status constitutes a betrayal of its initial commitments and a misuse of the non-profit structure. The company claims that OpenAI should be held accountable for its initial pledge and prevented from reappropriating assets accumulated as a charity for substantial private profit. Beyond the potential future implications, Meta also urges an investigation into OpenAI’s past practices to ascertain whether it has already inappropriately distributed assets to third-party entities, thus potentially depleting the resources of the non-profit.
Meta warns of the broader consequences OpenAI’s restructuring could have on the Silicon Valley ecosystem. They argue that if this model is allowed, it could trigger a paradigm shift where startups exploit the non-profit structure to raise significant capital through tax-free donations under the guise of research and development, only to later convert to for-profit entities once their technology reaches commercial viability. This practice, Meta contends, would create an uneven playing field, granting such companies an unfair advantage over traditional for-profit startups while simultaneously eroding public trust in charitable organizations.
The letter further elaborates on the potential market distortions that could arise if OpenAI’s model becomes commonplace. Non-profit investors would gain access to the same for-profit upside as traditional investors while also benefiting from tax write-offs, effectively double-dipping into public resources. This scenario, Meta argues, would compel other startups to adopt the same strategy to remain competitive, creating a system rife with potential for abuse and fundamentally altering the dynamics of startup funding and development.
Finally, Meta expresses its support for Elon Musk and Shivon Zilis’s lawsuit against OpenAI (Musk v. Altman, No. 4:24-cv-04722-YGR (N.D. Cal.)). Acknowledging their foundational roles in OpenAI’s creation and operation, Meta suggests that Musk and Zilis are uniquely positioned to represent the interests of Californians in this matter. Their intimate knowledge of OpenAI’s original intent and subsequent deviation from its charitable mission, Meta argues, makes them ideal advocates for public interest in this case. Meta concludes by reiterating its commitment to openness and transparency in the field of AI and urging the Attorney General’s office to take swift action, given the rapid pace of OpenAI’s for-profit conversion. They offer their assistance in answering any further questions and emphasize the urgency of the situation.
