OpenAI’s Scaled-Back Corporate Overhaul Is Not A Done Deal

OpenAI’s decision to reverse course on its sweeping corporate overhaul—retaining nonprofit control of its for-profit arm—may have calmed some investors and regulators, but this is far from a “mission accomplished” moment. The path to securing the $30 billion SoftBank investment, navigating regulatory approvals, and resolving legal battles remains littered with pitfalls. Let’s unpack why this scaled-back plan is still a gamble—and what investors should watch.

The Revised Structure: A Compromise with Big Risks

OpenAI’s May 2025 announcement was a retreat from its earlier plan to cede control to investors. Instead, the nonprofit will retain oversight of its for-profit subsidiary, now structured as a public benefit corporation (PBC). This move aims to reassure regulators and critics that its mission to develop AI for humanity’s benefit won’t be hijacked by profit motives. But here’s the catch: the nonprofit’s ability to enforce its will over the PBC is still undefined. Can it fire PBC executives? What happens if profit-driven decisions clash with safety concerns? These unanswered questions loom large.

Meanwhile, SoftBank’s $30 billion investment—critical for OpenAI’s future—is only halfway done. The first $10 billion was secured in April, but the remaining $30 billion hinges on OpenAI meeting Funding Conditions by year-end, including completing a complex recapitalization of its profit-sharing structure. If they fail? The deal shrinks to $10 billion—a huge blow.

Regulatory and Legal Headwinds

OpenAI’s survival depends on approvals from California and Delaware attorneys general. California’s AG Rob Bonta is still reviewing the plan, citing unresolved concerns about whether the nonprofit retains “appropriate control” over the PBC. Delaware’s AG Kathy Jennings has similar demands, and both states are scrutinizing whether the restructuring aligns with OpenAI’s original charitable mission.

Then there’s Elon Musk’s $97 billion lawsuit, which argues OpenAI abandoned its nonprofit purpose. A federal judge recently rejected OpenAI’s attempt to dismiss parts of the case, signaling heightened legal risks. Even if OpenAI wins, the prolonged battle could deter investors and divert resources from R&D.

The $30 Billion Question: Can They Pull It Off?

The stakes are astronomical. OpenAI’s valuation is now set at $260 billion—a figure that relies on the PBC’s ability to generate unlimited profits while adhering to the nonprofit’s mission. But here’s the rub: the PBC’s IP ownership of key models like ChatGPT remains unresolved. If the nonprofit retains control of the intellectual property, a future IPO—a potential exit for investors—could collapse.

Investors like Microsoft, which has poured $13.75 billion into OpenAI, are also holding out for ironclad guarantees. Microsoft’s silence on final approval speaks volumes—this isn’t just about money; it’s about ensuring its massive bet isn’t vaporized by governance failures.

Bottom Line: Proceed with Caution

OpenAI’s scaled-back overhaul is a step forward, but it’s far from a done deal. Investors should watch three critical milestones:

1. Regulatory Green Lights by Q1 2026: Without California and Delaware’s blessings, the $30 billion deal unravels.
2. Funding Conditions Met by Year-End: The PBC’s recapitalization must be finalized to unlock the full $30 billion.
3. Legal Battles Subsiding: Musk’s lawsuit and public scrutiny won’t disappear—every delay erodes trust.

The math is stark: OpenAI’s $12.7 billion projected 2025 revenue pales next to its need for capital. Without the SoftBank cash, R&D on advanced models like GPT-5 could stall, ceding ground to rivals like Anthropic or Chinese competitors.

In the end, OpenAI’s future isn’t just about AI—it’s about governance. Until the nonprofit proves it can enforce its mission over a profit-hungry PBC, this remains a high-risk, high-reward bet. Investors: keep your eyes wide open—and your powder dry until December.