Elon Musk questions OpenAI’s legality after $50M investment

  • OpenAI, which was initially a non-profit organization, transformed into a for-profit company in 2019 to have more flexibility in pursuing its objectives.
  • Elon Musk, a billionaire, has raised questions about the legality of OpenAI, the company responsible for ChatGPT, transitioning into a for-profit enterprise following his investment of around $50 million.

During Tesla’s yearly shareholder meeting on May 16, Elon Musk told CNBC that he had originally conceived the name “OpenAI” with the intention of creating an open-source alternative to DeepMind. This idea arose after Google acquired DeepMind in 2014.

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Musk compared OpenAI’s shift from a non-profit organization to a for-profit business to a situation where a group focused on saving the Amazon rainforest transformed into a lumber company that cuts down and sells trees from the forest.

“Is that allowed? It doesn’t seem right. Generally, if it’s allowed to start a company as a non-profit and then transfer its intellectual property to a for-profit company that makes a lot of money, shouldn’t that be the standard practice?”

OpenAI started as a non-profit organization to have the freedom to work towards its goal of advancing digital intelligence without the pressure to make financial profits. The focus was on benefiting humanity as a whole through their work.

In 2019, OpenAI made a decision to establish a new company called OpenAI LP, which they described as a “hybrid” or “capped-profit” organization. This new company operates under the oversight of the non-profit entity that originally founded OpenAI.

According to OpenAI, their decision to establish OpenAI LP as a hybrid entity has enabled them to attract more funding and grow more quickly. This has paved the way for significant investments from Microsoft, amounting to billions of dollars, as well as other ventures like their reported pursuit of $100 million to develop a new cryptocurrency called Worldcoin.

OpenAI says that creating OpenAI LP as a hybrid entity has helped them gather more funds and expand faster. This has led to major investments from Microsoft, totaling billions of dollars, and other projects, such as their efforts to raise $100 million for the development of a new cryptocurrency called Worldcoin.

This information is for general knowledge only and should not be considered as advice for investing or making financial decisions.

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