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by jasode 412 days ago
>"Self-dealing [...] convert some government supported PhD thesis work [...] the public (including me) never gets full access to the results of the publicly-funded work [...]

Your 2001 essay isn't a good parallel to OpenAI's situation.

OpenAI wasn't "publicly funded" i.e. with public donations or government grants.

The non-profit was started and privately funded by a small group of billionaires and other wealthy people (Elon Musk donates $44 million, Reid Hoffman, etc collectively pledging $1 billion of their own money).

They miscalculated in thinking their charity donations would be enough to recruit the PhD machine learning researchers and pay the high GPU costs to create the AI alternative to Google DeepMind, etc. Their 2015 assumptions about future AI development costs were massively underestimated and now they look like bad for trying to convert it to a for-profit enterprise. Instead of a big conversion to for-profit, they now will settle with keeping a subsidiary that's for-profit. Somewhat like other entities structured as a non-profit that owns for-profit subsidiaries such as Mozilla, Girl Scouts, Novo Nordisk, etc.

Obviously with hindsight... if they had to do it all over, they would just create the reverse structure of creating the OpenAI for-profit company as the "parent entity" that pledges to donate money to charities. E.g. Amazon Inc is the for-profit that donates to Housing Equity Fund for affordable housing.

1 comments

All 501(c)(3) are funded in part by the public by way of uncollected tax revenues for economically valuable activity.
>uncollected tax revenues for economically valuable activity.

Taxes are on profits not revenue. The for-profit OpenAI LLC subsidiary created in 2019 would have been the entity that owes taxes but it has been losing money and never made any profits to tax.

Yesterday's news about switching from for-profit LLC to for-profit PBC still leaves a business entity that's liable for future taxes on profits.

The contributors to the charity get a write off too