Encode Challenges OpenAI’s For-Profit Shift, Backing Musk’s Legal Battle
Encode files an amicus brief opposing OpenAI’s for-profit transition, raising concerns about AI safety and public benefit.
Encode Joins Musk’s Fight Against OpenAI’s For-Profit Transition
Encode, a nonprofit dedicated to amplifying younger voices in AI policy, has entered the legal fray surrounding OpenAI’s transition to a for-profit structure. The organization filed an amicus brief on Friday supporting Elon Musk’s injunction to halt OpenAI’s plans, arguing the shift could jeopardize the safety and public benefits of artificial intelligence development.
A Mission at Stake
Encode’s brief, submitted to the U.S. District Court for the Northern District of California, criticized OpenAI’s plans to transition its for-profit entity into a Delaware Public Benefit Corporation (PBC). According to Encode, this restructuring undermines the nonprofit’s founding mission to ensure the development of transformative AI technology prioritizes public welfare and safety over profits.
“If we truly stand at the threshold of artificial general intelligence (AGI), the stakes couldn’t be higher,” the brief stated. “It’s imperative that such transformative technology remains under the control of organizations legally committed to safety and public benefit, rather than those beholden to shareholder profits.”
From Nonprofit to For-Profit: A Controversial Evolution
Founded in 2015 as a nonprofit research lab, OpenAI initially sought to democratize AI development and ensure its safety. However, as its research demands grew, the organization adopted a hybrid structure. This included a for-profit subsidiary with a “capped profit” model, allowing investments from major entities like Microsoft.
The latest transition plan involves transforming the for-profit arm into a PBC, which would retain a public benefit mandate but operate under traditional corporate structures. OpenAI’s nonprofit arm would remain as a stakeholder, trading control for equity in the PBC.
This move has sparked criticism from various quarters, including Encode and high-profile individuals like Musk, an early contributor to OpenAI’s nonprofit efforts. Musk’s lawsuit accuses OpenAI of abandoning its philanthropic mission and leveraging its resources to stifle competition, including Musk’s own AI venture, xAI.
Concerns from Rivals and Experts
Meta, Facebook’s parent company and an OpenAI competitor has also voiced opposition to the shift. In a December letter to California Attorney General Rob Bonta, Meta warned that the restructuring could have “seismic implications for Silicon Valley.”
Encode’s legal team underscored these concerns, pointing out that the nonprofit OpenAI once had the authority to prioritize safety and halt AGI development if deemed necessary. That safeguard, Encode argues, would vanish under the PBC model.
The brief highlighted potential risks, such as the diminished incentive for a for-profit OpenAI to collaborate with other safety-focused projects. Encode also noted that the nonprofit’s board would lose the power to nullify investor equity in the event of safety concerns.
A Growing Rift Over AI Priorities
Internal disagreements within OpenAI have further fueled the controversy. Miles Brundage, a former policy researcher, recently criticized the organization’s shift in priorities. In posts on X (formerly Twitter), he expressed concern that the nonprofit could become a symbolic entity, allowing the for-profit arm to operate with minimal accountability.
Brundage’s comments echoed broader fears about the erosion of OpenAI’s fiduciary duty to humanity, which Encode’s brief argued would no longer be enforceable under Delaware law.
Encode’s Advocacy and Broader Implications
Encode, founded in 2020 by high school student Sneha Revanur, has made significant contributions to AI policy, including input on the White House’s AI Bill of Rights and President Biden’s executive order on AI. By challenging OpenAI’s transition, the organization aims to ensure that public safety remains central to AI governance.
“The implications of this restructuring go beyond OpenAI,” Encode’s brief concluded. “It sets a precedent that could redefine the balance between innovation, safety, and public accountability in the AI industry.”
Key Takeaways
Encode’s amicus brief supports Musk’s effort to block OpenAI’s transition to a for-profit PBC.
Critics argue the shift jeopardizes OpenAI’s original mission to prioritize safety and public benefit.
Rival Meta and former OpenAI employees have also raised concerns about the restructuring’s broader implications.
Encode’s involvement highlights the growing debate over AI’s governance and ethical development.
(Disclaimer: This article is meant to inform you, but it’s not a substitute for professional legal or financial advice.)
Also Read: OpenAI Plans Shift to For-Profit Structure