
Why EyesOnOpenAI is pushing the AI giant to benefit humanity instead of chase profits
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Hey everyone. Welcome to Decoder. I'm Alex Heath, deputy editor at the Verge and your Thursday episode guest host. We've covered OpenAI in several ways this summer, from how it's navigating the AI talent wars to how people are starting to feel attached to ChatGPT next week we're airing a recent conversation I had with Brett Taylor, the chairman of OpenAI's board. But today I want to zoom in on the battle that's brewing about the future of OpenAI itself. Despite being one of the most valuable companies in the world, OpenAI is still technically a non profit. That structure was designed back in 2015 to keep investors from steering artificial intelligence in ways that could harm humanity. It's also what set the stage for the dramatic board coup in 2023 that briefly ousted Sam Altman as CEO. And now OpenAI is trying to shake this nonprofit structure so that it can raise even more money and eventually go public. There's a lot at stake here, and not just for OpenAI. To unpack why it matters today, I'm joined by Catherine Bracey, CEO of Tech Equity, and Orson Aylad, CEO of Latino Prosperity. They help run Eyes on OpenAI, a coalition of advocacy groups that's challenging OpenAI's attempted restructuring. As you'll hear, Kathryn and orson argue that OpenAI has enjoyed the advantages of being a nonprofit while drifting away from its mission. It's a complicated, fascinating story that cuts to the heart of how the most important AI company in the world is structured and the impacts of that structure. Here, I should note that OpenAI declined to comment on this episode specifically. Instead, I was referred to a May blog post from Sam Altman in which he wrote that the company's proposed restructuring will still create the, quote, largest and most effective nonprofit in history. Okay, here's my conversation with Kathryn Bracey and Orson Aylad From Eyes on OpenAI. Kathryn and Orson, I'm so excited to have you both on, because I think this is an important topic that more people should actually understand, and they may in the coming months as this all comes to a head. That said, no one from OpenAI is here in this conversation, so I also kind of want to play devil's advocate here a little bit. And so my first question for both of you is simply, why should we care about OpenAI's nonprofit status? Why does it matter?
Kathryn Bracey
I think it might be helpful for your listeners to just be reminded of OpenAI's history and why it was founded, which is important to understand the governance structure. It was founded in order to ensure that this technology that its founders believed was imminent was going to benefit humanity and not undermine it. They had a strong understanding of the potential risks of AGI, and they wanted to build something that could harness that technology for good. And that was a lofty mission. And I think a lot of us at the time were very supportive of it. They structured themselves as a nonprofit explicitly to protect that technology and that mission from the imposition of investors onto the technology. And I thought this was very telling. I just wrote a book about venture capital and interviewed Sam Altman for the book and wanted to understand his thinking behind setting OpenAI up as a nonprofit. I didn't know that he would be so explicit about doing so because he wanted to protect it from investors, but that's exactly what he told me that he knew, and he knew very well because he was Running Y Combinator at the time, he knew what investors would ask of this technology, and he knew that those asks would create risks for AGI to not achieve the mission of benefiting all of humanity, but instead be focused on profit and in the focus on profits, create a lot of risks for humanity in the process. So the nonprofit structure was explicitly meant to protect society. And I think the fact that since I've had that conversation with Sam, they've taken a turn away from that mission and that structure to protect the technology and protect the mission is worrying. And so Orson and I and a coalition of other organizations are trying to make sure that at least the mission itself is protected, if not the governance structure.
Alex Heath
Talk about this coalition and who makes it up? What is its mission? How did it come together?
Orson Aylad
This coalition came about, you know, we were all reading the same articles where OpenAI wanted to basically abandon its nonprofit roots and go fully private. Many of us were concerned. One, OpenAI clearly is developing technology that will have severe consequences for society, will impact a lot of things. But we were looking at it mostly from a charitable asset law where we knew that there was precedent saying that if you do convert to a for profit and abandon your nonprofit roots, then you have to leave behind your public assets, your charitable assets, which at the time that we came together were valued roughly around 100 billion. Today it's about could be 500 billion. So the coalition came together, various nonprofit organizations, economic organizations, social justice organizations, educational organizations, also some labor organizations. And so today it's a coalition of over 60 organizations that continues to press the Attorney General in California, who can oversee charitable mission and charitable law, to ensure that OpenAI truly acts as a nonprofit and that they truly stick to their mission statement.
Alex Heath
For those who don't understand how this all works, can you give us a sense of the legal and monetary benefits that OpenAI has enjoyed so far as a nonprofit? And also, are there restrictions legally that it operates under being a nonprofit?
Kathryn Bracey
Neither one of us is a lawyer, so should make that caveat here, but both of us are founders of nonprofits and have boards and lawyers ourselves that tell us what we can and can't do. So, I mean, I think we can speak to it from that perspective. Obviously, any nonprofit can take donations tax free to the donor, and nonprofits also don't have to pay taxes. And then they operate under, you know, a set of rules that in exchange for that tax exempt status, they must, you know, do things that are in service of a public mission and not not to benefit a private profit motive. There's a variety of different ways that can look conflicts of interest and private interment and other things. But essentially OpenAI, starting as a research lab, created this mission. And I think as part of this mission, which made sense at the time, they were going to build this technology that could be in service to humanity over the course of time, crept away from that mission and I think at a certain point became for all intents and purposes a for profit startup that was competing with other for profit companies that were building similar technology and they were able to do so under a nonprofit banner with, with all of those tax benefits in place.
Alex Heath
This is wild to me. So you're. Are you saying that and I think just people need to understand this if this is true, that OpenAI, the hottest tech company in the world that's about to be the most valuable private company in the world at 500 billion potentially in the coming months, is taxed exempt.
Kathryn Bracey
The non profit entity is, is tax exempt.
Alex Heath
The nonprofit entity.
Kathryn Bracey
Okay, yeah. How much money they're running through the non profit, I don't think anybody's now donating money to the nonprofit and you know, getting a tax benefit on that donation. But again, because not a lawyer, it's.
Orson Aylad
Difficult because if you look at the their structure today, they're interconnected with a variety of LLCs, strong connection to Microsoft. What we do know is that the nonprofit status implies a strong legal and an ethical obligation to put the public interest ahead of shareholder returns. That's what we want. If that mission gets diluted, right. If they override that mission by private motives and they shift towards maximizing revenue instead of maximizing public good, then you're in violation of your nonprofit charter. Right? We both are nonprofits. We can't get rich of our nonprofits. We are highly regulated as nonprofits. We have to put together reports, audits that are available to the public. The same thing applies for OpenAI. And we just feel that they are operating with enormous amount of secrecy and that they're putting together the profit motives ahead of mission.
Kathryn Bracey
It's a little bit of a charade to say that they are operating as a nonprofit in the same way that like a traditional charity, this idea that they should receive the same benefits that like a soup kitchen receives is kind of ludicrous at this point. And you know, if I was competitor to OpenAI and I was having to follow a set of governance laws that apply to for profit companies and OpenAI didn't, then I don't know, that would make me kind of upset. So I just think it's time to throw off that charade and stop allowing them to use this nonprofit banner in their interest. They want all the benefits of a nonprofit status without any of the responsibility, and I think that's wrong.
Alex Heath
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Alex Heath
Welcome back. I'm glad you brought up competitors. Competitors have actually weighed in on this issue. Meta, for example, sent a letter to the California AG's office about this and they made the specific argument that OpenAI should not be allowed to flout the law by taking and reappropriating assets built as a charity and using them for potentially enormous private gains. And it also Made the point that this would be a, quote, seismic thing for Silicon Valley and would essentially allow a path for other companies to do the same thing for them to start as a nonprofit with tax exempt status and then switch later on when they decide they want to start making money. What do you guys think the second order effects are if OpenAI gets its way here ultimately and gets to pull this off? Maybe they pay a fine, back taxes, or they have to give more of their assets to the charity than they want, but essentially they get through all this because the train has left the station. What are the effects on other companies? You both run nonprofits. What are the effects on other nonprofits?
Kathryn Bracey
The reason the law exists in the way that it exists is to prevent companies from doing exactly this. I mean, it is legal. If they want to transition to a for profit, they can, but they cannot take the assets that they built as a nonprofit with them as they do so. So I suspect that they had a conversation with the attorney General about this transition and were told. I mean, I don't know, but, you know, they were told that they would have to leave a certain amount of those assets behind if they decided to make this trans. And they have since decided that, in fact, no, they're not. They're going to maintain their current status as sort of a Potemkin nonprofit that oversees the for profit and at the same time remove the profit caps on investors and let investors do whatever they want and take the company public. And that's the kind of thing that I think is not acceptable. They were just transitioning to a for profit and leaving the assets behind in the charitable sector. Then that would be fine. I would totally support them leaving. But by trying to take the money with them, they are making a mockery of the rule of law, which I think is one of the impacts it would have on California and the entrepreneurial environment and mocking its competitors, creating a permission structure by which any startup could try and do the same thing. If they are allowed to do this with no consequence, no real consequence, then it will provide the blueprint for other companies to do the same thing. And the AG won't really have as much moral authority to stop that from happening.
Orson Aylad
If I can add, I highly doubt that the AG would let them go on just because they might feel as though the train has left the station just because of the issues that Catherine raised, the precedents, the appearance of public interest governments to attract goodwill and resources, and then just abandoning those if they get the green light. I can't imagine how many other nonprofits would try to do the same thing. So because of that, I do think that the AG would sue them. And we would, of course, urge the AG who served the people of California to sue because of the precedent that this sets.
Alex Heath
At the same time, I think you both can appreciate that for them to theoretically leave charitable assets behind, I mean, that's essentially the whole company. I mean, what else is there? They become the ChatGPT developer platform company. The charity as it exists is really nothing. I mean, the charity entity, I'm not sure what it does. The last time I saw the IRS report on it, it had negligible assets. It was like maybe tens of millions, whereas the rest of OpenAI is worth hundreds of billions. So for them to, like you were saying, Catherine, properly leave behind the charitable assets, they have to basically start over from scratch. Is that what you guys are asking them to do?
Kathryn Bracey
Legally, that is what the law says. I think the AG has some latitude on what kind of settlement he could negotiate with them. I think he does have to balance the interests of maintaining California's position as a place where innovation can happen and also the public interest. But it is true that these assets were created with the support of the people of California. And the law says that if you make this transition, you have to leave behind assets. And so those assets, some significant number of those assets, should remain in the public interest so that they can be used to advance the mission of AI benefiting all of humanity.
Alex Heath
And practically, this looks like the assets are shares of OpenAI. Like, it's just straight money. I'm being kind of silly here, but it's not like the people of California will all of a sudden get governance over, like, ChatGPT usage in California. Right? We're talking about financial assets.
Orson Aylad
Can I clarify? One of the things that we are pushing for is, you know, essentially, OpenAI has two functions as a nonprofit. One is to adhere it to its mission, and that means safeguards to ensure that AI is used for the benefit of humanity. So there's a governance piece there that we think still should continue. And there's a second piece, which is the distribution of assets, which they mention also in their mission statement. What we're arguing is that they continue to govern with that mission in mind because they have to. They've decided that they want to stay a nonprofit, but that the distribution of assets be free of conflict and that those assets be spun off to an independent entity. Nobody here thinks that independent entities should receive the full 500 billion. I think right now, the AG of Delaware and the AG of California are trying to value what the assets might be, but our goal is that they're continuing to be strong governance so that OpenAI adheres to safeguards, some of the things we really need in the AI sector, but then that we have an independent entity that is fairly valued and perhaps over time funded.
Alex Heath
Right.
Orson Aylad
It could remain connected to the OpenAI so that there are a lot of talks of OpenAI going public one day. This independent nonprofit could get shares of that. So we are asking for two things, the ongoing governance and an independent entity that will oversee the distribution of assets.
Alex Heath
Let's talk about the governance piece and the mission statement a little bit more, because I think the first time a lot of people probably realized that OpenAI was still controlled by a nonprofit was when its CEO, Sam Altman, was briefly fired by the board of directors in 2023. This ruined my week. I reported on this extensively. Very dramatic.
Kathryn Bracey
All right, I see your Thanksgiving.
Alex Heath
Exactly. And that board, that same board, it's not the same. It's almost completely changed over. But legally, that same board still controls the company to this day, because OpenAI, despite the headlines, and a lot of people probably think OpenAI has not been a nonprofit for the last while, it still is legally a nonprofit because it hasn't done this transition. So it's the same governance structure as what it had fundamentally when Sam was fired in 2023. There's a scene from that saga, that board coup, that I remember vividly, where a bunch of OpenAI execs got in a room at headquarters and they got on the phone with the group of board members who fired Sam. And I'm paraphrasing, but at one point, one of the execs said something like, what you're doing is killing the company. You know, OpenAI will go to zero if you follow through with this and you don't bring Sam back. And one of the board members on the other end of the call said that would be perfectly in line with the mission that we have as the board and everyone that worked at OpenAI, the quote unquote, for profit company was just, like, aghast at this because it's. It is a crazy thing because, like, Open Air at that time was already a super commercial entity. It was resetting the tech industry fundamentally in the AI race. And so to hear that, wait, like, we're controlled by this board, that the interest of the board could mean that the company shuts down. It's a very strange concept. And I'm wanting to double click on that with you Guys like, what exactly is the governance role of the board as it exists today? And what does that mean? That means they can just shut the company down.
Kathryn Bracey
You say they are still legally a nonprofit. I would say they're actually a nonprofit on paper, but we don't think that they are operating legally, which is sort of the point you were making. And in order for them to be operating legally as a nonprofit, yes, the board, its only commitment, its only fiduciary responsibility is to the mission of the organization. My sense from OpenAI is that they don't understand their responsibility to the mission. They do treat this like a for profit company and they have sort of deluded themselves into thinking that by building the most powerful, valuable for profit entity that is ultimately in service to the nonprofit because it will deliver more financial benefits to the nonprofit that it could then do something with to further the mission. And that's actually not the point at all. I mean, as a nonprofit leader myself, my responsibility is to turn down money if it is going to affect my ability to execute against the mission. And it is the board's legal responsibility to provide oversight to ensure that I do that as the CEO. So there is no world in which maximizing the profitability of this company for shareholders, for employees, for whoever is always aligned with the mission of the nonprofit. And when the mission diverges from the profit motivation, the mission has to always override, even if that means taking the company to zero. And if they can't live with that, that's totally fine. They should spin off the for profit and leave a significant set of assets in the charitable sector. That's all we're asking them to do. It's not really clear why they refuse to do so.
Alex Heath
And we should just be clear that the nonprofit mission is to develop AGI that benefits all of humanity. I have a lot of problems with that because it's inherently very squishy and can be defined however you want. What does benefiting mean in that context? What is all of humanity? But yeah, maybe we can talk about that. Like, does the mission need to change for the nonprofit? Is it too vague? Because at the time in 2023 when Sam was fired, that board decided that firing Sam was in the benefit of AGI for all of humanity. But you know, it's hard to get there. Perhaps now it's hard to see exactly how you execute that day to day.
Orson Aylad
I guess we haven't weighed in much on the specifics of the mission. I think what's important is the governance and the practice align with their current Mission. I think the current mission is fine. What's not fine is the conflicts of interest that we see. We asked earlier, what is the board doing now? I think that's the biggest question. We're not sure who's really in charge here, right? Is it Microsoft? Is it the investors? Is it the employees? It appears employees were given shares, right? Current and former employees were given shares of this company. And so of course they don't want to see their nonprofit go down because their shares would go down. But that's again, big reason why there's a huge conflict here is because when you're giving shares to your employees, we know that they're not going to be in service to the mission. They're going to be in service to wanting to get paid. Right? It's the tech mentality, the startup mentality, and it seems like they built it that way. So I think that the mission we can live with, what we just need more answers is on the governance and the practices that align with the mission.
Kathryn Bracey
One set of people we haven't talked about yet very much are the investors. And I just cannot reconcile this current proposed structure that they want to live under. Maintaining the nonprofit ownership of the for profit, but converting the for profit into a basically a no different from a normal startup where shareholders can have equity stakes, Sam Altman presumably can have equity stakes. The employees can have equity stakes that they can eventually go public and that SoftBank and, you know, Thrive are going to be okay with the nonprofit board being able to drive the company to zero. I'm sure there was a conversation at some point before the $40 billion funding round where they said, we're not going to do this unless you can guarantee that the nonprofit does not have the control to do that. And I suspect they were told that, yeah, we would make sure that the non profit didn't have control and so they tried to spin out into its their own entity. I think the major question is why they decided to stop going that route and to maintain their current structure with the nonprofit ownership and what assurances they've given to those investors that make them okay with maintaining the nonprofit ownership of the for profit company. It doesn't make any sense that they would be if the nonprofit is still in a position to put the priority of the mission above the profit priority. So do they have some agreement between the shareholders and the company that the nonprofit only has control on paper and will not ever challenge the for profit? These are questions that have not been answered. And I think that, you know, their decision not to actually spin out the for profit into its own standalone entity raises more questions than it answers and so that's why we are still asking the AG to investigate.
Orson Aylad
We met with OpenAI's team shortly after the decision where they retreated for profit. Not only would they not answer questions, but they said they didn't have the answers to a lot of the questions. So to Kathryn's point, it seems like something happened and they retreated quickly without truly knowing how this was going to play out.
Alex Heath
We have to take another quick break. We'll be right back.
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And we're back. Because this is just very complex, I want to explain to the listener how this for profit subsidiary works. So we should explain why they created this in the first place, which is that they needed a way to raise money and they couldn't do it feasibly through the nonprofit. They needed to raise billions of dollars for compute. But they have caps. It's like 100x roughly cap to align with the nonprofit mission that an investor can make in its investment. And the website for OpenAI used to say, like all investors should treat this as a donation. We're not even legally obligated like a normal for profit company to ensure or work in our best interest to make a return on your investment. But they that and so there's this cap. They want to remove the cap so that more investors can come in, put billions more in, and then eventually they can IPO with a potentially unlimited upside as well. And to do that, they've been trying to get rid of the nonprofit. And what happened in the last couple months, which we've been talking about, is that basically they realized they couldn't do that, that there was too much opposition, I think, from your coalition. They created their own commission to look into this. And their own commission said that the nonprofit needed to stay in OpenAI. So that's why they, I think, decided to keep the nonprofit in play, is they realized there was going to be no legal path forward to fully getting rid of it. But yeah, I also have the questions you have, Katherine. I don't really understand how they can have it both ways. How can you have a nonprofit board still in quote unquote, control when it really is just sitting over to the side with a bunch of shares that it got from this conversion.
Kathryn Bracey
Just to be clear, their commission, the nonprofit commission that made the recommendation around independent governance happened after that report came out, after they made this decision. So in terms of the sequence of events, and I would say it's not accurate to say that they can't transition, they can absolutely transition to a for profit. And there is precedent. The proposal that we're making to the AG is actually built on the precedent of healthcare companies in the 90s that transitioned from nonprofits to for profits. And when they made that transition, they negotiated with the AG to leave a certain amount of their assets behind. They have now gone on to be very successful for profit healthcare companies. And they endowed a couple of foundations in California, the California Wellness foundation, the California Endowment, and I think the California Health Care foundation that now maintain the mission and distribute those benefits to support the health of Californians. And so it's perfectly possible there is legal precedent for them to spin off and go about their for profit business. And that's the path they were on. The question is why did they decide to forego that path and try to now, as they are saying, maintain this nonprofit ownership structure, which, as we've discussed, isn't viable in the long term. You cannot reconcile the nonprofit and the shareholders imperative. So that's the question they haven't answered. They also apparently have not worked out a Deal with Microsoft. Microsoft did not know about this before they made the announcement that in fact they were going to maintain their nonprofit status. It is very fishy that they were on a path to doing what was very clearly the legal thing to do. And then all of a sudden they decided not to do that and have created what I think is a bigger mess for themselves and trying to like say that this nonprofit has some meaningful control over the for profit. So, you know, until they answer that question, I think it's right for people to be suspicious of what's going on here.
Alex Heath
And just so people understand what you're saying about Microsoft, Microsoft is obviously OpenAI's largest shareholder. What's essentially happening with this nonprofit conversion is the dividing of the pie. All the investors are realizing that the division of the pie is about to change because OpenAI is about to have to leave behind at least some significant chunk TBD on what size of the chunk of the equity value in the for profit subsidiary. They have to leave it behind with the nonprofit to complete this conversion that they want to do, which is not the original one they wanted to do, but it's still going to convert them into a uncapped commercial entity. And now that leaves Microsoft going, wait, well, how much are we going to get? How much do we have to dilute ourselves? How much do other investors have to dilute themselves? And if OpenAI were making billions of dollars in profit, I'm actually not sure this would be such an interesting story. The reason, to me this is so interesting is because OpenAI is doing a very high wire blitzkrieg run on the tech industry and raising billions of dollars and immediately pouring those billions of dollars back into more training, more compute, hiring more researchers. They're not profitable and they actually don't plan to be profitable anytime soon. So any kind of major financial hiccup on the way where all of a sudden they have to pay a ton of money or leave a bunch of equity behind, could actually make them stumble in a way that I don't think people fully appreciate. Just considering OpenAI seems so ascendant and so untouchable and, and it is huge. But financially it's not profitable. And so all of this really matters because it's not like they can just afford to pay off the state of California billions of dollars. Do you all agree with that?
Orson Aylad
I do agree. You know, for OpenAI, it was their decision to be a non profit. It was part of Sam Altman's vision and I do think that it has created problems for them. That's their making their non profit. It's up to us to ensure they act as non profit. But I do think that they have a unique structure that they want to just go on and race ahead and beat the competition. It's different for them because of the things that they've said and the things that they've committed to.
Alex Heath
So what do you guys want to see happen next? We've talked about governance. The board control sounds like a key piece. They still haven't committed to the size of the equity that they're going to leave behind for the nonprofit. Obviously that matters.
Orson Aylad
Yeah, we're waiting for the attorney general. We're continuing to meet with the attorney General to see where they're going. Up to now they say very little. But we do have to see more specifics around the governance piece that we've raised. Right. How are they going to remove all the conflicts of interest? Are they going to put together strong whistleblower laws to ensure that the company truly is mission driven and not for profit driven? And then on the other end, we want to ensure that there's a independent entity that is free from the conflict, free to pursue the mission that is fairly valued and can be set up similar to the previous foundations that Katherine mentioned, the California Endowment Wellness. But the biggest signal that we're waiting for now is from the ag. They have to complete their investigation and they have to put together, they have to show these specifics to the public. This is the deal behind closed doors. I think it would just be a huge setback for nonprofit integrity in the state. And so we truly believe that the AG will do the right thing, be transparent, show us what the investigation yield and protect nonprofit integrity in California.
Alex Heath
We've been talking a lot about the business of this, the industry stuff. It's a very heady, complex topic that people in tech and AI will obviously find interesting. But I think what I'm still trying to understand, I think from the both of you is what is it that everyday people should care about on this topic? You're talking about the integrity of like how nonprofits work in this country. Obviously that matters. But if you're just an everyday person who maybe uses ChatGPT or doesn't, why does this matter? Isn't this just more just corporate drama?
Kathryn Bracey
This is a conversation we're having about one company and its governance structure. But it has ramifications for the entire AI industry. And OpenAI kind of set itself up as a non profit that was going to set an industry wide standard for this technology before there was an industry. When they released Chat GPT, they became just another player in that industry. And I don't blame them for this. Like they have to compete with Anthropic and Google and Meta and all the other model builders and that means that their nonprofit is hamstrung. It can't really do the work of advancing its mission because it is so tied to the fate of this one player in the industry. What would be possible if the AG did what we're asking him to do and there was a spin out organization or set of organizations that had control of a significant amount of assets to ensure that AGI was benefiting all of humanity is they could do work that would cross the industry. It wouldn't just be about OpenAI, it would be about making sure that the entire industry was responsive to the public. It could fund advocacy, it could fund public option for compute. It could fund research that would happen at universities and not in private labs that are only owned by shareholders. It could fund workforce training, it could fund education. It could fund all of these things that currently the state is just not in a position to fund and that would benefit everybody, the public to take advantage of this new technology and hopefully that would ensure that AI was being used as a benefit and being used by us and not on us. And that would affect all of the companies who are operating in this space not just apply to OpenAI in a vacuum.
Orson Aylad
People are watching this because they know that AI is going to have huge ramifications on Society and where OpenAI goes, the industry could follow. We should make sure that the benefit to the public truly comes out forward on this and it would be a shame if we lost a benefit to the community on this.
Alex Heath
I'd like to thank Kathryn and Orson for taking the time to speak with me and thank you for tuning in. If you'd like to let us know what you thought about this show or what else you'd like us to cover, drop us a line. You can email us ecoterge.com the team really does read every email. We also have a TikTok and an Instagram. Check those out. Decoder Pod and if you like Decoder, please share it with your friends and subscribe wherever you get your podcasts. Decoder is a production of the Verge and is part of the Vox Media Podcast Network. Our producers are Kate Cox and Nick Staat. Our editor is Ursa Wright. The Decoder music is by Breakmaster Cylinder. See you next time.
Podcast: Decoder with Nilay Patel (The Verge)
Host: Alex Heath (guest host, Deputy Editor, The Verge)
Episode: The quest to keep OpenAI honest
Release Date: September 4, 2025
This episode delves deep into OpenAI's complex and controversial nonprofit status, its governance, and what is at stake as the company seeks to restructure and potentially go fully commercial. Host Alex Heath sits down with Kathryn Bracey (CEO, Tech Equity) and Orson Aylad (CEO, Latino Prosperity) — co-leaders of the Eyes on OpenAI coalition — to explore why OpenAI’s nonprofit roots matter, why its attempted restructuring is raising alarms, and what the outcomes could mean for both the tech industry and the public.
Kathryn Bracey outlines OpenAI's founding mission: to ensure artificial general intelligence (AGI) is developed for the benefit of all humanity, expressly shielding it from profit-driven investor motives.
The nonprofit structure was chosen to "protect that technology and that mission from the imposition of investors" ([04:38], Bracey).
Quote:
“The nonprofit structure was explicitly meant to protect society.”
— Kathryn Bracey [06:09]
Over time, OpenAI has “drifted away” from this founding mission and structure, moving towards a profit orientation.
“It’s a coalition of over 60 organizations that continues to press the Attorney General… to ensure that OpenAI truly acts as a nonprofit and sticks to their mission statement.”
— Orson Aylad [07:42]
“They want all the benefits of a nonprofit status without any of the responsibility, and I think that’s wrong.”
— Kathryn Bracey [11:19]
“If they are allowed to do this with no consequence… it will provide the blueprint for other companies to do the same thing.”
— Kathryn Bracey [16:54]
“You cannot reconcile the nonprofit and the shareholders imperative.”
— Kathryn Bracey [33:26]
Aylad: OpenAI’s choice to be a nonprofit is foundational, and failing to honor those legal responsibilities undermines trust and fair practice.
The coalition’s asks:
Bracey: If the AG’s office does its job, the impact could benefit everyone by funding research, education, and public infrastructure for AI, far beyond OpenAI itself.
“It wouldn’t just be about OpenAI, it would be about making sure that the entire industry was responsive to the public.”
— Kathryn Bracey [39:16]
Aylad: The public is invested in the outcome because of AI’s broad societal ramifications—where OpenAI goes, the industry could follow.
| Timestamp | Speaker | Quote | |---------------|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------| | 06:09 | Kathryn Bracey | “The nonprofit structure was explicitly meant to protect society.” | | 11:19 | Kathryn Bracey | “They want all the benefits of a nonprofit status without any of the responsibility, and I think that’s wrong.” | | 16:54 | Kathryn Bracey | “If they are allowed to do this with no consequence… it will provide the blueprint for other companies to do the same thing.” | | 23:45 | Kathryn Bracey | “The mission has to always override, even if that means taking the company to zero.” | | 33:26 | Kathryn Bracey | “You cannot reconcile the nonprofit and the shareholders imperative.” | | 39:16 | Kathryn Bracey | “It wouldn’t just be about OpenAI, it would be about making sure that the entire industry was responsive to the public.” |