The OpenAI Conundrum: A Conflict of Interest?
It's been said that “the enemy of my enemy is my friend” — and this appears to be exactly what’s playing out with Elon Musk and Mark Zuckerberg when it comes to OpenAI.
Zuckerberg’s Meta has joined Musk’s xAI in calling for authorities to stop the Sam Altman-headed company from pursuing for-profit status. Both claim that OpenAI is essentially defrauding the public by masquerading as a nonprofit — after all, its name signifies its original intent to serve as an open AI platform.
The Debate
The idea of becoming a for-profit has been floated by OpenAI nearly from the start — and it has been a matter of continued contention in the industry.
This ratcheted up last week, as first reported by The Wall Street Journal, when Meta Platforms sent a letter to California Attorney General Rob Bonta, saying that it was “deeply concerned” about OpenAI’s attempts to remove its non-profit status.
Meta claimed that OpenAI is taking advantage of its non-profit status and is “flouting the law,” raising billions as a charity that could result in enormous private gains.
Industry Perspectives
Inbar pointed out that in the AI world, there is no “fair” competition or second-best — it’s a winner-take-all situation.
Going for-profit will help OpenAI maintain superiority, with stable funding from shareholders — he noted. On the other hand, though, the public will no longer be able to benefit from, contribute to, or influence AI development.
“For OpenAI to grow into a massive valuation, they need to become a highly strategic vendor to large companies,” said Baier. He pointed out that large companies are willing to spend “tens and hundreds of millions” with strategically important vendors such as Microsoft or SAP.
Challenges and Controversies
It’s worth noting that the company has continued to be plagued by leadership and board issues: Several founders have left and leadership has cycled in and out; then there was the notorious four-day-long firing-then-rehiring saga of CEO Altman in November 2023.
The controversy surrounding OpenAI’s for-profit status is likely to continue, with Meta and xAI remaining vocal opponents. Only time will tell what the future holds for this massive economic engine.
