[jongjong]

I think this is missing the main point that Musk was never the owner of OpenAI, neither was Sam, nor the employees. The owners are the American people. I presume Musk got a tax rebate from his donation, courtesy of the taxpayer; so did every other donor.

The fact is, OpenAI was a non-profit belonging to the public and it was appropriated by the donors... Who already got their tax cuts.

This is setting a precedent that if you donate a certain amount of money to a charity, you can later convert it to a for-profit and claim to be an owner of the charity... On the basis of 'donations' which you got a tax rebate from. Very convenient.

OpenAI donors should have created a new, separate, for-profit entity completely distinct from OpenAI, with a different name, poached the original employees, implemented all the logic from scratch, collected all the training data from scratch... This would have been correct. Basically what Anthropic did seems more like the correct way.

[susiecambria]

OpenAI Foundation is a corporation established in Delaware. It has received it's 501(c)3 status from the IRS which means donations are deductible to the fullest extent of the law (or some such; it's been a long time since I've had to write that). The American people do not own the foundation.

As for the OpenAI that is a public benefits corporation, I know nothing about all the ins and outs of that type of corporation.

[ryan_j_naughton]

No one owns a nonprofit, so your analogy is fundamentally incorrect and based on a misunderstanding of how nonprofits work.

It is actually extremely important that no one “owns” a nonprofit in the way shareholders own a corporation. A nonprofit has no equity owners. It has directors/officers with fiduciary duties, and its assets must be used consistently with its charitable/public-benefit purpose.

But to be clear, that is in no way equivalent, even metaphorically, to it being "owned by the public".

“Public benefit” does not mean “whatever the median taxpayer would vote for” or “whatever the government currently approves of.” It includes many causes supported by small, unpopular, eccentric, religious, ideological, scientific, or advocacy-oriented communities, so long as the organization fits within an exempt purpose and does not operate for impermissible private benefit.

simple examples can easily elucidate this. One can found a nonprofit for a purpose that society generally disagree with. For instance: - a nonprofit to advocate for the rights of hemorrhagic fevers as living organisms - nonprofit museum devoted to preserving a deeply unpopular ideology’s historical artifacts - a nonprofit to educate the public about an eccentric scientific theory - a nonprofit advocating for legal recognition of some fringe moral concern

All of these could be legitimate nonprofits under the law, even though we may deeply disagree with them. This is by design.

[jongjong]

IMO, those arguments are grasping for specific definitions of 'ownership'. In its essence, the non-profit structure represents the concept of 'public ownership' to the fullest extent possible under the law. Of course, it's missing some characteristics typically associated with private ownership but it has the core component which is "It should serve the public" which mirrors the idea that a corporation should "Serve its shareholders."

I think if the non-profit retained over 50% of the shares of the for-profit subsidiary, a case could have been made that the public-benefit aspect is still dominant. But with only a 26% stake, that argument cannot be made.

[granzymes]

The intellectual property (code, data) was transferred from the nonprofit to the for-profit for about $60M, which is what an independent firm hired to assess the value said the IP was worth in late 2018 / early 2019. The nonprofit itself was never converted to a for-profit, and indeed remains a nonprofit to this day.

The $60M in IP has grown to about a $200B stake in the OpenAI for-profit.

[trivo]

So you're saying that the non-profit (OpenAI Foundation) owns a certain percentage of the for-profit (OpenAI Corporation)?

[dboreham]

The easiest way to think about this is to globally replace "non-profit" with "tax-vehicle". These things are all kinds of company. They just created the company in a tax efficient (for them) way.

[marcus_holmes]

I don't understand your reasoning here. You seem to be suggesting that non-profits are owned by the American people?

Is there some part of this that I'm missing where this was true of OpenAI at some point?

[jongjong]

I'm using the term 'owners' loosely here, but this is a much more reasonable interpretation than the interpretation that the donors are the owners.

[marcus_holmes]

I don't think you understand how non-profits work. Essentially they are exactly the same as for-profits, except they can't issue dividends. Ownership works exactly the same as for-profit companies.

A cynical take is that non-profits are for-salary; they still pay their owners, just using other means.

edit: no, my bad, apparently I misunderstood how non-profits work in the USA. Thanks for the correction :)

[granzymes]

This is not correct. jongjong is correct that a nonprofit does not have owners in the sense that a for-profit has owners. Nonprofits are dedicated to their mission, and are run by a board of directors.

You cannot have a % ownership in a nonprofit because its resources must be used exclusively to carry out its mission. You could have a % control in its decision making process.

[philipallstar]

Well, its resources can be used to pay giant salaries. That's somehow not against its mission.

And businesses with owners can be dedicated to their mission.

And public businesses are run by a board of directors.

The main difference isn't what you're saying, which is somewhat subject to interpretation. It's just that people can't invest money with expectation of a return, other than via employment, speaking fees, etc etc.

[tptacek]

They're correct about the equity ownership bit, but not in their argument that there's an implicit public claim of control.

[somenameforme]

Even more true given the mixture of the regularity of extremely high executive compensation in non-profits paired alongside the distribution of revenue through extremely inefficient contracting.

For an example of the former, the previous head head of Mozilla received a compensation that rose from about 2 million a year to nearly 7 million a year following hundreds of layoffs due to declining revenues. For an example of the latter, following the earthquake in Haiti, the American Red Cross raised nearly half a billion dollars. After all was said and done, they built a total of 6 homes. [1]

Basically, non-profit is a tax-status with conditions. But those conditions are sufficiently unenforceable or side steppable that it's ultimately just a tax status. And the whole game of OpenAI being nonprofit until profits started rolling in is just making this even more clear.

[1] - https://www.propublica.org/article/how-the-red-cross-raised-...