Why California’s attorney general must continue the investigation into OpenAI

The only nonprofit newsroom in California dedicated exclusively to covering statewide issues that impact all Californians is CalMatters. Welcome. For a Saturday morning summary of the most recent Golden State news and analysis, sign up for WeeklyMatters.

This article is featured on California Voices, a discussion platform that aims to increase public awareness of the state and highlight Californians who are directly affected by policies or their lack. Find out more here.

Written by: Guest Commentary

Orson Aguilar

LatinoProsperity was founded by Orson Aguilar, who also serves as its CEO. He was born in Boyles Heights, Los Angeles, and is on the boards of Innovate Public Schools and The East Los Angeles Community Corporation.

Catherine Bracy

TechEquity was founded by Catherine Bracy, who also serves as its CEO. She was the senior director of partnerships and ecosystem at Code for America before becoming the author of World Eaters.

Days after declaring that it would continue to operate as a nonprofit organization and abandoning its plans to become a for-profit company, OpenAI surprised us with another announcement: a nearly $6.5 billion deal to acquire io, a start-up founded by former Apple executive and iPhone designer Jony Ive.

OpenAI has other corporate deals in the works besides this one. The business has apparently acquired AI startup Windsurf and announced plans to construct a sizable new data center in the United Arab Emirates.

Its profit-driven business practices should dispel any doubts that the public benefits from OpenAI’s decision to stay a nonprofit. These kinds of agreements weaken the nonprofit’s hold on the company by requiring OpenAI to sell its stock.

Fundamental questions regarding how OpenAI’s transition to a public benefit corporation will preserve the nonprofit’s independent oversight remain unanswered. Which of OpenAI’s organizations is the owner of the technologies it creates? How would OpenAI prevent investors and executives from engaging in self-dealing and conflicts of interest? Who will benefit from the money that the for-profit company invests? Above all, what occurs when the public interest that the nonprofit is constitutionally obligated to serve clashes with the interests of shareholders?

The California and Delaware attorneys general’s investigations into OpenAI’s organization must go forward without answers to these important questions.

In order to guarantee that artificial intelligence would benefit all of humanity, OpenAI was first established as a charity. Its current organizational structure permits profit and commercial gain to supersede its public welfare goal.

Since 2019, OpenAI has systematically moved authority from its nonprofit parent company into a complex network of investor connections and corporate transactions. The nonprofit’s ability to guide AI toward significant public benefits is severely weakened, and it increasingly assumes the position of a helpless bystander rather than a guardian of the public interest. Its assets are also completely unaccounted for.

The most recent change made by OpenAI is a deft rebranding of its troublesome business-as-usual strategy. It’s a means of avoiding lawsuits, avoiding more scrutiny, and prioritizing the interests of investors over the general public, which OpenAI is legally obligated to serve.

Read Next

California is investigating OpenAI s conversion to a for-profit company

The public is entitled to transparency and answers. The future of OpenAI has significant ramifications for the welfare of society, despite the fact that disagreements over governance frameworks and the laws of nonprofit ownership may appear tiresome and unrelated to the lives of regular people.

On the one hand, advances in artificial intelligence are enabling us to predict fatal illnesses, adapt to climate change, and just free up more time in our hectic lives. Conversely, the technology is also contributing to the acceleration of greenhouse gas emissions, wrongful incarceration, unemployment, and global disinformation.

It’s difficult to envision how much human-level AI may help civilization, but it’s also difficult to anticipate how much it could harm society if developed or applied improperly, according to OpenAI’s own founding statement. There is a far greater probability of guaranteeing the good future vision of AI than the negative if OpenAI’s charitable assets were taken away from its business interests and placed in the hands of a completely autonomous nonprofit that may continue its original objective.

Therefore, in their continuing investigations into OpenAI’s restructure, the attorneys general of Delaware and California must act decisively. OpenAI’s governance structure has to be thoroughly investigated and monitored, and its prior adherence to California charitable law needs to be examined. Every nonprofit asset unrelated to governance should have a fair market value and be transferred to a new, completely independent charity that is committed to promoting the good of the public. Finally, in order to hold OpenAI responsible, the nonprofit board must have genuine independence and continuous supervision authority.

Since OpenAI was founded as a charity, it must promote the general welfare rather than individual interests. However, OpenAI has been going against its objective for years by utilizing those philanthropic assets for profit. There must be a distinct division. The public is entitled to what OpenAI promised when it first started.

Read More

Costly and unreliable: AI and plagiarism detectors wreak havoc in higher ed

State claims there s zero high-risk AI in California government despite ample evidence to the contrary

CalMatters has further information.

Text

Receive breaking news on your mobile device.

Get it here

Use our app to stay up to date.

Register

Get free updates delivered straight to your inbox.

Safeguard independent news for California s future

CalMatters has been educating millions of Californians and holding our government and special interests accountable for a decade.

• We report what s happening.
• We ask the hard questions.
• We make our government transparent to Californians.

All donations are currently matched dollar for dollar. Would you kindly help CalMatters today?

Accountability lapses in the absence of independent, persistent reporting:

• People lose visibility into decisions that shape their future.
• Misinformation and special interests gain more ground.
• Public trust erodes.

Don’t allow that to occur. Donate now to support CalMatters’ fearless and independent journalism.

The news cannot wait, so give today.