OpenAI Disputes Report of Potential California Exit Amid Restructuring Scrutiny
SAN FRANCISCO – OpenAI is actively working to resolve regulatory concerns surrounding its transition from a non-profit to a for-profit structure and denies reports it is indeed considering a relocation out of California as a “last-ditch” effort, despite increasing pressure from state officials and a coalition of opposing groups. The Wall Street Journal reported on the possibility, but OpenAI maintains it has no plans to leave the state.
The company’s restructuring is currently under investigation by California Attorney General Rob Bonta, who is examining whether the conversion violates state charitable trust law. A broad coalition-including nonprofits, labor groups, philanthropies, and competitor Meta-is also challenging the move.
At stake is approximately $19 billion in funding tied to the restructuring. Failure to complete the conversion could lead investors to withdraw their support, posing a importent threat to the ChatGPT maker.
The potential relocation would be unexpected given CEO Sam Altman’s strong ties to the Bay Area. Altman served on the transition team for San francisco Mayor Daniel Lurie, elected last year, and reportedly owns at least four properties in San Francisco and one in Napa Valley.Furthermore, a substantial portion of OpenAI’s AI research talent is concentrated in San Francisco, presenting logistical hurdles to a move.OpenAI is currently collaborating with attorneys general in both California and Delaware to address concerns related to the restructuring. This regulatory pressure coincides with ongoing challenges for the company,including fierce competition for skilled AI professionals.
