6 ms·
The "coup by MSFT" conspiracy theory made no sense. Microsoft has an insanely good deal with OpenAI: * Exclusive access to resell OpenAI's technology and k
by aduffy 3y ago
The "coup by MSFT" conspiracy theory made no sense. Microsoft has an insanely good deal with OpenAI:
* Exclusive access to resell OpenAI's technology and keep nearly all of that revenue for themselves, both cloud and services
* Receive 75% of OpenAI's profits up to $1 trillion
All they had to do is not rock the boat and let the golden goose keep laying eggs. A massive disruption like this, so soon after DevDay would not fit that strategy.
My guess at this point is financial malfeasance, either failing to present a deal to the board or OpenAI has been in financial straits and he was covering it up.
- IAmNotACellist 3y agoOpenAI shouldn't even be making a profit, as it's a 501(c)3 charity. The whole umbrella for-profit corp they formed when they became popular should be illegal, and is clearly immoral.
- abigail95 3y agoIllegal to restructure a business?
- OkayPhysicist 3y agoTo restructure a non-profit, that solicited donations, into a for-profit entity? Abso-fucking-lutely.
- sbierwagen 3y agoEasy enough to return the donations.
- username135 3y agoIs this sarcasm?
- EchoReflection 3y agopretty sure not sarcasm
- arthurcolle 3y agoMoney is spent
- AYBABTME 3y agoIt's not just "restructuring" a business that's a 501(c)3... to make it a golden goose for MSFT. The whole thing was created to avoid one of Big Tech having a monopoly on AI, and it turns into Big Tech having a monopoly. Perhaps it's all legal but I think it's very understandable to look at it and think it's a travesty.
- pfannkuchen 3y agoI thought it was created to prevent specifically Google from having a monopoly on AI. So mission accomplished?
- speedylight 3y agoI imagine you’d have to either pay back all of the people who donated to the non-profit first, or negotiate a deal with for a stake in the company before you can transform it into a for profit.
- quickthrowman 3y agoYou have it backwards, the not for profit entity owns the for profit entity. From Wikipedia: > OpenAI is an American artificial intelligence (AI) organization consisting of the non-profit OpenAI, Inc.[4] registered in Delaware and its for-profit subsidiary corporation OpenAI Global, LLC.[5] IKEA [0] and Rolex [1] are structured in a similar manner, although different since they’re not US based. [0] https://en.m.wikipedia.org/wiki/Stichting_INGKA_Foundation https://en.m.wikipedia.org/wiki/Stichting_INGKA_Foundation [1] https://en.m.wikipedia.org/wiki/Hans_Wilsdorf#Hans_Wilsdorf_Foundation https://en.m.wikipedia.org/wiki/Hans_Wilsdorf#Hans_Wilsdorf_...
- goodluckchuck 3y agoWhat’s the point of the subsidiary? Nonprofits can already raise funds by e.g. selling T-Shirts, baked goods, ai services, etc…
- deleted 3y ago[deleted]
- next_xibalba 3y agoIt is hard to attract multi-billion dollar investments and attract elite AI talent when competing with for-profits. This was the stated reason and makes a lot of sense. The comp packages for elite AI talent is now claimed to be in the range of $10M.
- deleted 3y ago[deleted]
- wmf 3y agoIf a nonprofit has mostly revenue and few donations (Mozilla) the IRS revokes their tax exemption. OpenAI could not have done the Microsoft deal as a nonprofit.
- jltsiren 3y agoTo maintain a clear separation between for-profit and non-profit activities. If a non-profit operates in a market with for-profit competitors, tax authorities may start considering it a for-profit organization, making all of its income taxable. And maybe to allow choosing the right people for the right job. If the non-profit has an ideological purpose, its leadership should probably reflect that. At the same time, the for-profit subsidiary probably works better under professional management.
- wmf 3y agoIf OpenAI hadn't restructured they wouldn't have gotten any money from Microsoft and they would have either run out of money or the team would have left and started ClosedAI. There's no scenario where they developed GPT-3/4 while staying nonprofit.
- theonemind 3y agoI'm guessing that's the point. Ethics required getting out of the 501(c)(3), so the ClosedAI thing sounds more ethical. The 501(c)(3) should've collapsed or not exist.
- deleted 3y ago[deleted]
- YeBanKo 3y agoOr they would get more money from other donors to build open source models.
- ffgjgf1 3y agoHard to believe. Nobody is going around throwing billions without any hope of recouping any of it eventually (except the EU of course but giving any money to organizations which actually might be capable of building something useful is against their policy).
- thayne 3y agoI'm not really sure what is open about OpenAI.
- BiteCode_dev 3y agoBS, you can still make a deal with microsoft as a non profit, where the deal gives them an exclusive licence to use the result in exchange for financing. MS doesn't care about how money it cost, they care about the fact it's their ticket back into the fight with google and apple.
- morpheuskafka 3y agoDoesn't Mozilla have an identical structure (which is the inverse of what you said, the nonprofit owns the for-profit--it wouldn't make any sense for a for-profit to own a non-profit due to the no private inurement requirement)?
- jacooper 3y agoAFAIK that's how OpenAI does it, the non-profit controls the for-profit.
- dragonwriter 3y agoI think Mozilla Corp is 100% owned by the nonprofit, which is a little different. It allows activity which a nonprofit couldn't directly do, and which has a different tax treatment, but its not returning profits to someone else like OpenAI Global LLC and, as I understand it, its immediate parent holding company both do. But they are similar in that both involve a nonprofit controlling subordinate for-profit entities.
- deleted 3y ago[deleted]
- jowea 3y ago> it wouldn't make any sense for a for-profit to own a non-profit due to the no private inurement requirement)? The most obvious example is the corporate foundation, but if we believe the first result from a search you're right in they are controlled but not owned by the for-profit: > A for-profit cannot own a nonprofit because a nonprofit has no owners. However, a for-profit can set up a structure in which it effectively has control over the nonprofit, subject to applicable laws, including those regarding private inurement, private benefit, and corporate self-dealing > https://nonprofitlawblog.com/can-a-nonprofit-own-a-for-profit-can-a-for-profit-own-a-nonprofit/ https://nonprofitlawblog.com/can-a-nonprofit-own-a-for-profi...
- dragonwriter 3y ago> OpenAI shouldn't even be making a profit, as it's a 501(c)3 charity First, the “OpenAI" whose profits are being discussed isn't a 501(c)3 charity, but a for-profit LLC (OpenAI Global, LLC) with three other organizations between it and the charity. Second, charities and other nonprofits can make profits (surplus revenue), they just can't return revenues (but they can have for profit subsidiaries that return profit to them and other investors in certain circumstances.) > The whole umbrella for-profit corp they formed when they became popular should be illegal The umbrella organization is a charity. The for profit organizations (both OpenAI Global LLC that Microsoft invests in, and its immediate holding company parent which has some other investors besides the charity) are subordinate to the charity and its goals. > and is clearly immoral. Not sure what moral principal and analysis you are applying to reach this conclusion.
- HeavyStorm 3y ago> Not sure what moral principal and analysis you are applying to reach this conclusion. I'm not the parent, but I think it's clear: if I'm a charity, and I have a subordinate that is for profit, then I'm not a charity. I'm working for profit, and disguising myself for the benefits of being a charity.
- deleted 3y ago[deleted]
- dragonwriter 3y agoNot only do I think that that's not obvious, I think its a nonsensical conclusion that really only makes sense as a general statement if you think “for profit” means “to earn revenue” rather than “to return money to an interested party” and invert the parent/subsidiary relationship. Obviously, the for profit subsidiary ooerates for profit—and where its not a wholly owned subsidiary, it may return some profit to investors that aren't the charity—but neither the subsidiary nor the outside investors getbthe benefits of charity status.
- nativeit 3y agoProfits don’t necessarily have to be used to pad the already overstuffed offshore accounts of wankers. Sometimes organizations choose to use profits to directly fund charitable works. Please wipe up after yourself if this causes your head to explode.
- partiallypro 3y agoA non-profit still can't continuously have millions or billions in cash burn with no new income. It's not about profit, it's about surviving at all.
- irthomasthomas 3y agoMaybe this is the reason?
- deleted 3y ago[deleted]
- speedylight 3y agoThis is probably a dumb question, but what are some specific scenarios of financial malfeasance that could’ve taken place? Like Altman stealing money from OpenAI?
- fakedang 3y agoThat's my unsubstantiated hypothesis. The board going so public of this nature could only mean he was doing some grave shit like embezzlement or intentional financial misreporting.
- disgruntledphd2 3y agoOr the board messed up because they're not strong in corporate governance.
- fakedang 3y agoThat's increasingly turning out to be the case.