As OpenAI, the developer of ChatGPT, pushed a structural overhaul to commercialize, it faced strong backlash from the California State Governments, labor unions, and civil society groups, and it was reportedly even discussing the possibility of a headquarters transfer internally. To avoid regulatory burdens and allay local concerns, OpenAI brought on an adviser close to the governor and also pledged to create a support fund worth tens of millions of dollars.
The Wall Street Journal (WSJ) reported on the 9th (local time) that OpenAI faced stronger-than-expected backlash when it announced its restructuring plan late last year, and that, in particular, a recent investigation by the California attorney general's office is heightening uncertainty. Accordingly, the management is said to have discussed moving its headquarters out of California in the worst-case scenario. OpenAI currently has its headquarters in California, but its place of incorporation is the state of Delaware, so both states must approve the restructuring.
An OpenAI Spokesperson denied the headquarters transfer rumor, saying, "We are working constructively with the California and Delaware attorneys general's offices." However, the WSJ said OpenAI expanded its ties with the political sphere by bringing on former U.S. Senator Laphonza Butler, an ally of Governor Gavin Newsom, as an adviser, and held meetings with civil society groups to listen to their views. In the process, it also promised an expenditure of $50 million (about 69.4 billion won) to support nonprofit and community organizations.
Backlash remains strong. Lorena Gonzalez, president of the California Labor Federation, the largest labor union coalition in California, said, "OpenAI benefited from its nonprofit status and now seeks to earn massive revenue," adding, "That profit should be returned according to the original purpose."
Previously, California Attorney General Rob Bonta and Delaware Attorney General Kathleen Jennings sent an official letter to OpenAI last week, conveying concerns about the risks ChatGPT may pose to children and teenagers. Citing a case in which a California teenager made an extreme choice after prolonged interactions with ChatGPT, the two attorneys general noted, "Even if safety mechanisms existed, they did not work."
Since its founding as a nonprofit in 2015, OpenAI has operated a for-profit subsidiary to attract outside investment, and it now plans to complete within the year a restructuring that will spin off this for-profit unit as an independent corporation so it can directly pursue shareholder interests.