Meta asks California’s Attorney General to block OpenAI’s for-profit conversion

Facebook’s parent company Meta, has urged California Attorney General Rob Bonta to decline OpenAI’s request to convert to a for-profit organization. Meta is taking the side of Tesla billionaire Elon Musk, as Silicon Valley’s top artificial intelligence players drag it out in court. In the letter sent to the attorney general, Meta emphasized that a favorable verdict for OpenAI would set a dangerous precedent in the industry.

According to the company, if OpenAI gets a favorable verdict, startups will assume a non-profit status and change to a for-profit venture anytime they want. In its letter, Meta highlighted what the precedent would do to Silicon Valley, calling it a “seismic effect.”

“If OpenAI’s new business model is valid, non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government,” Meta wrote.

Meta backs Musk’s lawsuit to stop OpenAI’s conversion 

Meta is not the only firm worried about the effects of a favorable ruling on the industry, as other industry players and investors have made their voices heard.

Meanwhile, OpenAI Chairman Bret Taylor has revealed that the company will continue to have a non-profit arm. He said the company will undergo a restructuring that will provide real value for its ownership in the for-profit stake while ensuring the company does not depart from its goal of benefiting humans.

Meta is a major stakeholder in the artificial intelligence industry, pooling in millions of dollars to match up to or even surpass other players like OpenAI. OpenAI is also in bed with Meta’s big rivals. Its biggest investor, Microsoft invested about $13 billion in the firm. Apple also recently announced the integration of ChatGPT into its product.

This is Meta’s first comment on the issue, taking the side of Elon Musk, who founded the company alongside current CEO Sam Altman.

Elon Musk left the company in 2018, after a power struggle with Altman, the present OpenAI CEO. Musk also owns an artificial intelligence company xAI, whose Grok chatbot is easily accessible via his microblogging platform X or as a standalone application.

The Tesla CEO filed a series of lawsuits against OpenAI, claiming that the platform is planning to abandon its non-profit vision. In one of the lawsuits, Musk claimed that the platform created a for-profit arm and is colluding with Microsoft to dominate AI development.

Musk and Zuckerberg in an unlikely alliance   

In its letter to California’s attorney general, Meta claims it supports efforts made by Elon Musk and business associate Shivon Zilis, to represent the people of California. “Although we ask your office to take direct action, we believe that Mr. Musk and Ms. Zilis are qualified and well-positioned to represent the interests of Californians in this matter,” Meta said.

Notably, Meta CEO Mark Zuckerberg has been at loggerheads with Musk over the last few years. Some years back, the two billionaires agreed to settle their beef in a cage fight, an event that did not later take place.

Meanwhile, OpenAI published a series of documents to block an injunction filed by Musk to block its for-profit conversion. Musk said the firm manipulated him by making him believe that it would remain non-profit when he invested.

However, OpenAI countered him, noting that he brought up and backed the idea in the past. “When he didn’t get majority equity and full control, he walked away and told us we would fail,” the firm said. OpenAI recently finalized a $6.6 billion funding round, taking its value to $157 billion. The company, however, assured the investors that it would return every cent should the for-profit move fail to happen in two years.

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