OpenAI has scrapped a restructuring initiative that would have separated its for-profit and nonprofit arms.

Chief Executive Officer Sam Altman announced the move today in a memo to employees.

OpenAI launched in 2015 as a nonprofit artificial intelligence research lab. Four years later, it created a for-profit arm to lead its AI development and commercialization efforts. The investors who have backed OpenAI’s multibillion-dollar funding rounds received stakes in the for-profit arm.

Last year, the ChatGPT developer revealed plans to change its organizational structure. The initiative would have seen OpenAI restructure its for-profit arm as a public benefit corporation, or PBC. This is a type of business that balances shareholder interests with a public benefit interest. Additionally, OpenAI had reportedly planned to remove a clause that caps investors’ returns.

The AI developer today detailed a revised restructuring plan that includes all those steps, with one key difference. Under the original plan, the PBC created through the restructuring would not have been controlled by OpenAI’s nonprofit parent organization. Under the new plan, the nonprofit will retain control.

“We made the decision for the nonprofit to retain control of OpenAI after hearing from civic leaders and engaging in constructive dialogue with the offices of the Attorney General of Delaware and the Attorney General of California,” Altman wrote in today’s memo to employees. “We look forward to advancing the details of this plan in continued conversation with them, Microsoft, and our newly appointed nonprofit commissioners.”

Last month, a group of former OpenAI employees petitioned the two attorneys general to block the AI provider’s original restructuring initiative. Earlier, Elon Musk sued OpenAI in California with the same goal. Musk’s xAI Corp. competes with OpenAI.

It’s unclear how OpenAI’s revised restructuring roadmap will affect its balance sheet. When the AI provider raised $6.6 billion last year, Axios reported that the participants in the round can ask for their money back if the restructuring initiative isn’t completed within two years. The consortium that provided the capital included Thrive Capital, Microsoft Corp., Nvidia Corp., SoftBank Group Corp. and other high-profile backers. 

A few months after the deal, SoftBank announced plans to lead another $40 billion investment in OpenAI. The Japanese tech giant stated that it would provide up to three-quarters of the sum. According to CNBC, the terms of the deal state that SoftBank can cut its investment from $30 billion to $20 billion if OpenAI doesn’t restructure as an independent for-profit company by Dec. 31.

OpenAI’s nonprofit parent organization will become a major stakeholder in the for-profit arm after it restructures as a PBC. The AI provider is hiring financial advisers to help it determine value of the nonprofit’s stake. 

“As the PBC grows, the nonprofit’s resources will grow, so it can do even more,” Altman wrote in the memo.

The change in course comes as OpenAI prepares to launch GPT-5, its next flagship AI system. Some of the system’s features will be powered by o3, a reasoning model that debuted in April and has set records across several AI benchmarks. OpenAI plans to integrate GPT-5 into both the free and paid versions of ChatGPT. 

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