Meta is latest AI rival to take legal action to block OpenAI’s for-profit pivot

The news: Meta sent a letter to California’s attorney general last week asking that OpenAI’s transition to a for-profit company be stopped.

Meta is following in Elon Musk’s footsteps in taking legal action to stall OpenAI’s impending shift from an AI nonprofit to a Big Tech company. He claimed that the startup violated its founding principles by focusing on profits over safety.

Meta questions OpenAI’s motivations: Meta is saying that OpenAI raising billions of dollars in investments as a nonprofit and then switching to a for-profit business could lead to “a proliferation of similar startup ventures that are notionally charitable until they are potentially profitable,” per Engadget.

  • In the company’s letter to Attorney General Rob Bonta, Meta said letting OpenAI abandon its nonprofit roots would have “seismic implications for Silicon Valley.”
  • “If OpenAI’s new business model is valid, nonprofit investors would get the same for-profit upside … while also benefiting from tax write-offs bestowed by the government,” Meta stated.

OpenAI on the defensive: The ChatGPT-maker fired back on Friday by releasing a blog post titled “Elon Musk wanted an OpenAI for-profit.” 

  • OpenAI’s response to Musk, who was one of the company’s co-founders, and other companies challenging its for-profit pivot is “you can’t sue your way to AGI (artificial general intelligence).” 
  • The company’s sentiment is that rivals should be competing in the marketplace rather than in the courtroom.

Momentum is currently on OpenAI’s side: The company just released its latest models, including the Sora video generator and Advanced Voice mode with Vision updates.  

ChatGPT-integration is also available on selected iPhones with Apple Intelligence, which could help accelerate mobile generative AI (genAI) use and adoption. 

Our take: Legal pushback from AI rivals might raise anticompetitive scrutiny around OpenAI’s long-term plans and expansion, especially as it increases user-engagement and paid subscriptions.

 

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