OpenAI Faces Scrutiny Over Corporate Structure

OpenAI, the AI developer behind ChatGPT, is facing challenges regarding its nonprofit origins as it considers restructuring to possibly become a public benefit corporation amidst its skyrocketing valuation of $157 billion. Nonprofit tax experts are scrutinizing the company's operations, particularly the tension between its nonprofit mission and its for-profit subsidiaries, especially following leadership upheavals involving CEO Sam Altman. Despite the financial turmoil, including projected losses of up to $14 billion by 2026, OpenAI has successfully raised significant funding, amounting to $6.6 billion recently, aimed at advancing its AI models. The new o1 model shows promising performance in standardized testing, but it also raises concerns about increased hallucinations compared to previous versions. The company's financial sustainability remains in question, as it is not expected to turn a profit until 2029. OpenAI's structural issues, leadership changes, and substantial operational costs are raising alarms even as the demand for generative AI technologies continues to grow.