Meta urges California attorney general to stop OpenAI from becoming for-profit, WSJ reports (updated)

CACI International

14/12/2024 01:53

(Adds details from the WSJ report in paragraph 9; background in
paragraphs 5-7 and 10, comment from OpenAI in paragraph 8)
       Dec 13 (Reuters) - Meta Platforms  META.O  is urging
California's attorney general to block OpenAI's planned
conversion to a for-profit company, the Wall Street Journal
reported on Friday.
    In a letter to Attorney General Rob Bonta dated Thursday,
Meta said that allowing OpenAI to become a for-profit company
would set a dangerous precedent of allowing startups to enjoy
the advantages of nonprofit status until they are poised to
become profitable, WSJ reported.
    "OpenAI's conduct could have seismic implications for
Silicon Valley. If OpenAI's new business model is valid,
non-profit investors would get the same for-profit upside as
those who invest the conventional way in for-profit companies
while also benefiting from tax write-offs bestowed by the
government," the WSJ report quotes Meta as saying in the letter.
    Meta and the California AG's office did not immediately
respond to a Reuters request for comment.
    Earlier on Friday, OpenAI asked a federal judge in
California to reject a request by billionaire Elon Musk to halt
the ChatGPT maker's conversion to a for-profit company. 
        Musk sued OpenAI and its CEO Sam Altman in August,
claiming they violated contract provisions by putting profits
ahead of the public good in the push to advance AI.
  
        In November, Musk asked U.S. District Judge Yvonne
Gonzalez Rogers in Oakland for a preliminary injunction blocking
OpenAI from converting to a for-profit structure.
  
        "While our work remains ongoing as we continue to
consult independent financial and legal advisors, any potential
restructuring would ensure the nonprofit continues to exist and
thrive, and receives full value for its current stake in the
OpenAI for-profit with an enhanced ability to pursue its
mission," OpenAI chairman Bret Taylor said in a statement.
  
        In its letter, Meta said it supported an effort by Musk
to represent the interests of the public in deciding whether
OpenAI will be allowed to become a for-profit company, the WSJ
report added.
  
        Musk, who was an OpenAI co-founder, has since launched a
competing artificial intelligence company, xAI.
  
    
    

 (Reporting by Rishabh Jaiswal in Bengaluru; editing by Diane
Craft)
 ((rishabh.jaiswal@thomsonreuters.com;))