So if you take as your baseline that the December 2024 announcement was just a codification of what was happening anyway — in terms of OpenAI just like acting like a for-profit that sort of had a nonprofit attached to it in some weird way — then I think the outcome is a lot better than that. …

If your baseline for comparison is an idealistic view of what OpenAI was meant to be when it was founded in 2015, I think this is in some sense a catastrophe. We’ve just lost a lot, as the public, of what we should have had if OpenAI had been the better version of itself it was always supposed to be.

— Tyler Whitmer

The interview in a nutshell

Tyler Whitmer, a commercial litigator and founder of Legal Advocates for Safe Science and Technology (LASST), explains how the California and Delaware attorneys general (AGs) rejected OpenAI’s December 2024 restructure proposal. While he argues the public suffered a “poignant loss” by ceding exclusive nonprofit control over AGI, the AGs forced major concessions that are a significant win for safety and oversight compared to the “flagrant misappropriation” that was originally proposed.

1. The AGs enshrined the nonprofit’s safety mission and control

OpenAI’s original proposal would have sidelined the nonprofit, turning it into a minority shareholder focused on generic grantmaking. The AGs rejected this, forcing a new structure that preserves the nonprofit’s power in several key ways:

• Mission primacy: The nonprofit’s original mission is now enshrined in the new for-profit public benefit corporation (PBC) charter and legally takes precedence over profit motives on safety and security issues.
• Nonprofit control: The nonprofit retains significant control over the for-profit PBC, rather than being sidelined:
  • It holds a special class of shares (Class N shares) that gives its board the right to appoint and fire the PBC’s board members.
  • It wields direct power over safety decisions through its Safety and Security Committee (SSC).
• AG oversight: The AGs preserved their own authority to regulate the enterprise.
  • They now have “additional hooks” through a binding Memorandum of Understanding (California) and a Statement of Non-Objection (Delaware).
  • These agreements grant the AGs rights to regular meetings (twice a year with the nonprofit board, four times a year with senior staff) and 21-day notice of any changes that might undermine their monitoring.
• Financial stake: The nonprofit’s stake is far larger than the ~10-20% originally proposed.
  • It now receives a 26% stake (worth ~$130 billion) plus an undisclosed warrant for more shares if OpenAI’s valuation increases 10x in 15 years.
  • The AGs hired their own independent financial advisors to confirm this was a fair deal for the nonprofit.
• Charter and philanthropy: The OpenAI Charter, including the “Stop and Assist” commitment, was preserved. The nonprofit’s new $25 billion philanthropic fund will be partially focused on “technical solutions to AI resilience,” a more relevant goal than those originally suggested.

2. The nonprofit’s Safety & Security Committee (SSC) has real teeth — but may lack the will to use them

The new structure’s primary safety check is the SSC, a committee of the nonprofit board.

• Explicit power: The AG agreements confirm the SSC has the explicit authority to require mitigation measures, up to and including “halting the release of models or AI systems,” even if those systems would otherwise be permitted for release.
• The “intestinal fortitude” problem: This gives the four-person committee (Zico Kolter, Adam D’Angelo, Paul Nakasone, and Nicole Seligman) enormous power on paper.
• The risk: Tyler worries that these four volunteer corporate directors will face immense commercial pressure from the PBC and investors like Microsoft, and may lack the “intestinal fortitude” to actually use this power and block a multibillion dollar product from being deployed.
• Resource needs: For the SSC to be effective, Tyler argues it must hire its own dedicated, independent staff. The AG agreements allow the nonprofit to get resources, information, and employee access from the PBC via a “Support and Services Agreement” to do its oversight job.

3. The biggest loss: The public’s exclusive claim on AGI is gone

This was the one area where Tyler feels the public lost, as the AGs did not successfully intervene.

• The old promise: The original 2019 structure implied that once AGI was achieved, it would be governed exclusively by the nonprofit for the benefit of all humanity, and Microsoft’s IP licence would terminate.
• The new reality: The new structure allows the PBC to commercialise AGI like any other product, distributing its benefits to private investors.
• Microsoft’s win: Microsoft’s IP rights, which were supposed to terminate at AGI, now extend to 2032, and the company can commercialise AGI independently.
• Tyler calls this a “dramatic change” and a “poignant loss” that goes against the core founding principle of OpenAI.

4. “Scrappy resistance” worked, and continued vigilance is crucial

Tyler credits public advocacy from groups like his (LASST) for giving the AGs the “wind at their back” and “courage of their convictions” to challenge a “really well-heeled opponent.” The fight now shifts to monitoring this new structure.

• New legal tools: The new settlement creates new, and potentially stronger, avenues for enforcement:
  • The AGs can now sue OpenAI for violating the explicit MOU/Statement of Non-Objection.
  • Because the safety mission is in the PBC charter, a shareholder derivative suit (from a 2%+ bloc of shareholders) arguing the PBC is ignoring safety for profit is now more likely to succeed in Delaware court.
• What to watch for:
  • Hiring: Will the nonprofit hire a dedicated CEO or staff for the SSC and its $25B philanthropic fund? (Tyler sees this as a crucial positive signal).
  • New board member: The nonprofit must add another director who isn’t on the PBC board. Will this be a true AI safety expert or a “shill”?
  • Transparency: Will OpenAI publicly release the warrant details, the SSC’s specific powers (from a referenced September 2023 document), and be forthcoming in the annual mission reports required by the Delaware AG?