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OpenAI Charts New Course to Safeguard Vision and Leadership with Unique Corporate Structure Move
Generated by AI AgentWord on the Street
Wednesday, Oct 9, 2024 2:00 pm ET1min read
OpenAI is strategically moving towards an untested corporate structure aimed at protecting itself from hostile takeovers, while also safeguarding CEO Sam Altman from external interference. The artificial intelligence pioneer recently secured $6.6 billion in new funding and plans to restructure into a public benefit corporation. This novel and rare corporate model is being adopted by several AI competitors, including Anthropic and Elon Musk's xAI.
According to sources familiar with the company's strategy, the public benefit corporation framework offers a significant advantage by potentially thwarting unwelcome acquisition attempts or activist demands. This move could dissuade existing investors, such as Microsoft, or other entities from pursuing a takeover of OpenAI.
The public benefit corporation model mandates OpenAI to balance the optimal interests of shareholders, the public good, and stakeholders such as employees and society. Insiders suggest that this "multi-pronged fiduciary duty approach" provides OpenAI with a protective "safe harbor" against activists possibly alleging insufficient profitability.
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