OpenAI: When a $13 Billion Tail Wagged a $500 Billion Dog


OpenAI: When a $13 Billion Tail Wagged a $500 Billion Dog

OpenAI is a tax-exempt charity, reportedly worth $500 billion, with a charitable mission to "ensure that AGI, or artificial general intelligence, benefits humanity." On November 17, 2023, the board of OpenAI fired its CEO, Sam Altman, because Mr. Altman’s lack of candor made it impossible for OpenAI to fulfill its charitable mission. Just five days later, Mr. Altman was reinstated as CEO. This exceedingly brief moment of upheaval, sometimes referred to as the “Blip” is largely credited to Microsoft, which invested $13 billion to become a minority investor in one of OpenAI’s for-profit subsidiaries. This begs the question: how did a minority owner of one of OpenAI’s subsidiaries dictate who will serve as CEO of OpenAI? The primary goal of charity law is to ensure that our tax-exempt charities act, for lack of a better word, charitable. The regime fulfills this goal primarily by removing the incentive to maximize profits. But if an investor of an OpenAI subsidiary (i.e., Microsoft) can use its influence to control the decisions of OpenAI, the legal regime requires a reexamination. This program will discuss how a $500 billion enterprise can be considered a charity, examine the phenomenon of nonprofit organizations forming for-profit subsidiaries, and discuss how for-profit subsidiaries of charities threatens to undermine the entire charitable legal regime.

Watch the video

Submit Payment

The cost of this CLE is $20

Attestation

This CLE is approved for .75 general credit