"The specific purpose of this corporation is to provide funding for research, development and distribution of technology related to artificial intelligence. The resulting technology will benefit the public and the corporation will seek to open source technology for the public benefit when applicable."
Based on this, it would be extremely hard to show that they are doing something very different from what they said they were going to do, namely, fund the research and development of AI technology. They state that the technology developed will benefit the public, not that it will belong to the public, except "when applicable."
It's not illegal for a non-profit to have a for-profit subsidiary earning income; many non-profits earn a substantial portion of their annual revenue from for-profit activities. The for-profit subsidiary/activity is subject to income tax. That income then goes to the non-profit parent can be used to fund the non-profit mission...which it appears they are. It would only be a private benefit issue if the directors or employees of the non-profit were to receive an "excess benefit" from the non-profit (generally, meaning salary and benefits or other remuneration in excess of what is appropriate based on the market).
Does it become applicable to open source when "The resulting technology will benefit the public"?
That seems the clearest read.
If so, OpenAI would have to argue that open sourcing their models wouldn't benefit the public, which... seems difficult.
They'd essentially have to argue that the public paying OpenAI to use an OpenAI-controlled model is more beneficial.
Or does "when applicable" mean something else? And if so, what? There aren't any other sentences around that indicate what else. And it's hard to argue that their models technically can't be open sourced, given other open source models.
After all, the AOI doesn't specify who determines "when applicable," or how "when applicable" is determined, or even when "when applicable" is determined. Without any of those, "when applicable" is a functionally meaningless phrase, intended to mollify unsavvy investors like Musk without constraining or binding the entity in any way.
If so, OpenAI would have to argue that open sourcing their models wouldn't benefit the public, which... seems difficult.
No, they don't have to do anything at all, since they get to decide when "when applicable" applies. And how. And to what...
Or does "when applicable" mean something else? And if so, what? There aren't any other sentences around that indicate what else. And it's hard to argue that their models technically can't be open sourced, given other open source models.
Exactly. That's the problem. There needs to be more to make "when applicable" mean something, and the lawyers drafting the agreement deliberately left that out because it's not intended to mean anything.
That doesn’t seem aligned with their articles of incorporation at all. If “when applicable” is wide enough to drive a profit-maximising bus through, they’re not a not-for-profit. And in that case, why bother with the AOI?
The articles of incorporation aren’t a contract. I don’t know enough law to be able to guess how it’ll be interpreted in court, but intuitively Elon seems to have a point. If you want to take the AOI seriously, Sam Altman’s OpenAI doesn’t pass the pub test.
The for profit entity is allowed to act in the interest of profits.
What is important is that the non profit must use the dividends it receives from the for profit entity in furtherance of is stated non-profit mission.
Elon does not have a point. He's simply proving that he is once again the dumbest guy in the room by failing to do basic due diligence with respect to his multi million dollar donation.
That being said, Altman is also doing sketchy things with OpenAI. But that was part of the reason why they created the for-profit entity: so Altman could do sketchy things that he could not do within the nonprofit entity. Regulators might be able to crack down on some of the sketch, but he's going to be able to get away with a lot of it.