Alnoor Ebrahim, Tufts University

OpenAI, the artificial intelligence company that developed the popular ChatGPT chatbot and the text-to-art program Dall-E, is at a crossroads. On Oct. 2, 2024, it announced that it had obtained US$6.6 billion in new funding from investors and that the business was worth an estimated $157 billion – making it only the second startup ever to be valued at over $100 billion.

Unlike other big tech companies, OpenAI is a nonprofit with a for-profit subsidiary that is overseen by a nonprofit board of directors. Since its founding in 2015, OpenAI’s official mission has been “to build artificial general intelligence (AGI) that is safe and benefits all of humanity.”

By late September 2024, The Associated Press, Reuters, The Wall Street Journal and many other media outlets were reporting that OpenAI plans to discard its nonprofit status and become a for-profit tech company managed by investors. These stories have all cited anonymous sources. The New York Times, referencing documents from the recent funding round, reported that unless this change happens within two years, the $6.6 billion in equity would become debt owed to the investors who provided that funding.

The Conversation U.S. asked Alnoor Ebrahim, a Tufts University management scholar, to explain why OpenAI’s leaders’ reported plans to change its structure would be significant and potentially problematic.

How have its top executives and board members responded?

There has been a lot of leadership turmoil at OpenAI. The disagreements boiled over in November 2023, when its board briefly ousted Sam Altman, its CEO. He got his job back in less than a week, and then three board members resigned. The departing directors were advocates for building stronger guardrails and encouraging regulation to protect humanity from potential harms posed by AI.

Over a dozen senior staff members have quit since then, including several other co-founders and executives responsible for overseeing OpenAI’s safety policies and practices. At least two of them have joined Anthropic, a rival founded by a former OpenAI executive responsible for AI safety. Some of the departing executives say that Altman has pushed the company to launch products prematurely.

Safety “has taken a backseat to shiny products,” said OpenAI’s former safety team leader Jan Leike, who quit in May 2024.

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Why would OpenAI’s structure change?

OpenAI’s deep-pocketed investors cannot own shares in the organization under its existing nonprofit governance structure, nor can they get a seat on its board of directors. That’s because OpenAI is incorporated as a nonprofit whose purpose is to benefit society rather than private interests. Until now, all rounds of investments, including a reported total of $13 billion from Microsoft, have been channeled through a for-profit subsidiary that belongs to the nonprofit.

The current structure allows OpenAI to accept money from private investors in exchange for a future portion of its profits. But those investors do not get a voting seat on the board, and their profits are “capped.” According to information previously made public, OpenAI’s original investors can’t earn more than 100 times the money they provided. The goal of this hybrid governance model is to balance profits with OpenAI’s safety-focused mission.

Becoming a for-profit enterprise would make it possible for its investors to acquire ownership stakes in OpenAI and no longer have to face a cap on their potential profits. Down the road, OpenAI could also go public and raise capital on the stock market.

Altman reportedly seeks to personally acquire a 7% equity stake in OpenAI, according to a Bloomberg article that cited unnamed sources.

That arrangement is not allowed for nonprofit executives, according to BoardSource, an association of nonprofit board members and executives. Instead, the association explains, nonprofits “must reinvest surpluses back into the organization and its tax-exempt purpose.”

What kind of company might OpenAI become?

The Washington Post and other media outlets have reported, also citing unnamed sources, that OpenAI might become a “public benefit corporation” – a business that aims to benefit society and earn profits.

Examples of businesses with this status, known as B Corps., include outdoor clothing and gear company Patagonia and eyewear maker Warby Parker.

It’s more typical that a for-profit business – not a nonprofit – becomes a benefit corporation, according to the B Lab, a network that sets standards and offers certification for B Corps. It is unusual for a nonprofit to do this because nonprofit governance already requires those groups to benefit society.

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Boards of companies with this legal status are free to consider the interests of society, the environment and people who aren’t its shareholders, but that is not required. The board may still choose to make profits a top priority and can drop its benefit status to satisfy its investors. That is what online craft marketplace Etsy did in 2017, two years after becoming a publicly traded company.

In my view, any attempt to convert a nonprofit into a public benefit corporation is a clear move away from focusing on the nonprofit’s mission. And there will be a risk that becoming a benefit corporation would just be a ploy to mask a shift toward focusing on revenue growth and investors’ profits.

Many legal scholars and other experts are predicting that OpenAI will not do away with its hybrid ownership model entirely because of legal restrictions on the placement of nonprofit assets in private hands.

But I think OpenAI has a possible workaround: It could try to dilute the nonprofit’s control by making it a minority shareholder in a new for-profit structure. This would effectively eliminate the nonprofit board’s power to hold the company accountable. Such a move could lead to an investigation by the office of the relevant state attorney general and potentially by the Internal Revenue Service.

What could happen if OpenAI turns into a for-profit company?

The stakes for society are high.

AI’s potential harms are wide-ranging, and some are already apparent, such as deceptive political campaigns and bias in health care.

If OpenAI, an industry leader, begins to focus more on earning profits than ensuring AI’s safety, I believe that these dangers could get worse. Geoffrey Hinton, who won the 2024 Nobel Prize in physics for his artificial intelligence research, has cautioned that AI may exacerbate inequality by replacing “lots of mundane jobs.” He believes that there’s a 50% probability “that we’ll have to confront the problem of AI trying to take over” from humanity.

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And even if OpenAI did retain board members for whom safety is a top concern, the only common denominator for the members of its new corporate board would be their obligation to protect the interests of the company’s shareholders, who would expect to earn a profit. While such expectations are common on a for-profit board, they constitute a conflict of interest on a nonprofit board where mission must come first and board members cannot benefit financially from the organization’s work.

The arrangement would, no doubt, please OpenAI’s investors. But would it be good for society? The purpose of nonprofit control over a for-profit subsidiary is to ensure that profit does not interfere with the nonprofit’s mission. Without guardrails to ensure that the board seeks to limit harm to humanity from AI, there would be little reason for it to prevent the company from maximizing profit, even if its chatbots and other AI products endanger society.

Regardless of what OpenAI does, most artificial intelligence companies are already for-profit businesses. So, in my view, the only way to manage the potential harms is through better industry standards and regulations that are starting to take shape.

California’s governor vetoed such a bill in September 2024 on the grounds it would slow innovation – but I believe slowing it down is exactly what is needed, given the dangers AI already poses to society.

Alnoor Ebrahim, Thomas Schmidheiny Professor of International Business, The Fletcher School & Tisch College of Civic Life, Tufts University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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The science section of our news blog STM Daily News provides readers with captivating and up-to-date information on the latest scientific discoveries, breakthroughs, and innovations across various fields. We offer engaging and accessible content, ensuring that readers with different levels of scientific knowledge can stay informed. Whether it’s exploring advancements in medicine, astronomy, technology, or environmental sciences, our science section strives to shed light on the intriguing world of scientific exploration and its profound impact on our daily lives. From thought-provoking articles to informative interviews with experts in the field, STM Daily News Science offers a harmonious blend of factual reporting, analysis, and exploration, making it a go-to source for science enthusiasts and curious minds alike. https://stmdailynews.com/category/science/

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HOUSTON /PRNewswire/ — Nauticus Robotics, Inc. (NASDAQ: KITT), a leading innovator in subsea robotics and software, announces a partnership with Florida Atlantic University (FAU) for further testing of its flagship underwater vehicle, Aquanaut Mark 2.

Nauticus has contracted with FAU to perform Aquanaut Mark 2 vehicle development testing in the protected waters near the university’s Institute for Ocean and Systems Engineering Dania Beach facilities as well as in the deeper waters of the Atlantic Ocean. This partnership is expected to result in approximately 90% savings on vehicle development testing. This phase of testing requires both shallow and deeper waters to fully test functionality while maintaining real-time communication via tether for instant feedback. It also provides the opportunity to carry out tetherless missions that simulate operations the Aquanaut vehicle is designed to accomplish. Without this partnership, testing in mid-range water depths would require the use of more expensive ocean-going vessels.

“Working at FAU this summer has provided a perfect platform to efficiently test the Aquanaut vehicle, in both protected waters for product development and open waters for data collection and sea trials. The location, and campus, at FAU has allowed us to expedite the Aquanaut system technology in preparation for commercial use,” stated Daniel Dehart, Nauticus Robotics’ Vice President of Field Operations.

Nauticus plans to continue testing Aquanaut vehicles in conjunction with FAU. The Aquanaut vehicle currently undergoing its final testing will move to the Gulf of Mexico later this month to begin commercial operations. Once ready, the second Aquanaut vehicle is planned to take its place at FAU to continue development of the next round of capabilities.

The Aquanaut vehicle leverages Nauticus’ proprietary ToolKITT software, a versatile and platform-independent solution previously tested across various subsea vehicle classes. By harnessing the power of ToolKITT and the pioneering design of Aquanaut, Nauticus is spearheading the industry’s shift from traditional tethered operations to augmented autonomy. This initiative aims to fully transform subsea operations into autonomous, highly efficient processes.

About Nauticus Robotics

Nauticus Robotics, Inc. develops autonomous robots for the ocean industries. Autonomy requires the extensive use of sensors, artificial intelligence, and effective algorithms for perception and decision allowing the robot to adapt to changing environments. The company’s business model includes using robotic systems for service, selling vehicles and components, and licensing of related software to both the commercial and defense business sectors. Nauticus has designed and is currently testing and certifying a new generation of vehicles to reduce operational cost and gather data to maintain and operate a wide variety of subsea infrastructure. Besides a standalone service offering and forward-facing products, Nauticus’ approach to ocean robotics has also resulted in the development of a range of technology products for retrofit/upgrading traditional ROV operations and other third-party vehicle platforms. Nauticus’ services provide customers with the necessary data collection, analytics, and subsea manipulation capabilities to support and maintain assets while reducing their operational footprint, operating cost, and greenhouse gas emissions, to improve offshore health, safety, and environmental exposure. 

SOURCE Nauticus Robotics, Inc.

https://prnmedia.prnewswire.com/news-releases/nauticus-robotics-enters-aquanaut-mark-2-testing-partnership-with-fau-302218514.html

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The science section of our news blog STM Daily News provides readers with captivating and up-to-date information on the latest scientific discoveries, breakthroughs, and innovations across various fields. We offer engaging and accessible content, ensuring that readers with different levels of scientific knowledge can stay informed. Whether it’s exploring advancements in medicine, astronomy, technology, or environmental sciences, our science section strives to shed light on the intriguing world of scientific exploration and its profound impact on our daily lives. From thought-provoking articles to informative interviews with experts in the field, STM Daily News Science offers a harmonious blend of factual reporting, analysis, and exploration, making it a go-to source for science enthusiasts and curious minds alike. https://stmdailynews.com/category/science/

OAKVILLE, ON, June 11, 2024 /CNW/ – The Weather Network has launched a first-of-kind ad campaign using an AI-Assisted Avatar of their own Content Creator and Presenter, Rachel Schoutsen. The Weather Network partnered with Home Hardware Stores Limited to showcase storefront and local store callouts where Rachel’s AI-Assisted Avatar covers an Ontario summer forecast, plus a summer sale call to action, designed to drive traffic to Home Hardware locations across Ontario.

Watch this video to see Rachel Schoutsen’s avatar in action

By leveraging advanced AI technologies, The Weather Network is now able to deliver hyper-local forecasts on a larger scale, providing communities and local economies with opportunities to prepare for and respond to weather-related events. The Weather Network’s mission is to keep its users safe and informed with accurate and localized weather information.

“This partnership puts Home Hardware front and centre when Canadians are engaging with weather content and planning for the summer ahead,” said Simon Jennings, CRO, The Weather Network. “Canadians want to know what to expect as they plan their busiest social days and holidays and can purchase the right products for the weather forecast in their area.”

“Home Hardware is a business built on serving small communities across the country and we are proud to support The Weather Network’s innovative efforts to do the same through AI technology,” said Laura Baker, Chief Marketing Officer, Home Hardware Stores Limited. “Our more than 1,000 stores and the Dealers who operate them make it their mission to provide comprehensive support for all our customers’ home improvement needs within their communities. That means helping Canadians complete and enjoy their outdoor home improvement and yard maintenance projects while also preparing for any inclement weather events.”

With a focus on helping users and businesses make informed decisions using cutting-edge technology, The Weather Network is committed to ensuring the use of avatars in its promotional materials aligns with the highest ethical standards. All promotional materials have a clear disclaimer to ensure its viewers are well informed of AI-created content. In addition, employee avatars are used with their consent and an agreement to participate.

“We are excited about this latest innovation and the opportunities it will provide to our consumers and businesses,” said Maureen Rogers, Managing Director Editorial & Public Alerting, The Weather Network. “As with any new product we launch, we value their input and will use it to continuously improve the product to meet their needs and deliver products that exceed their expectations. We are delighted to have partnered with Home Hardware on piloting this new product with us.”

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The Weather Network recently launched Your Weather Assistant, a generative AI tool to transform the way people consume weather information. The introduction of its newly developed AI-Assisted Avatar demonstrates Pelmorex Corp.’s, owner of The Weather Network, commitment to innovation as it evolves into an AI-frontiered weather and climate organization.

About Pelmorex Corp.
Pelmorex Corp., founded in 1989, is an international weather information and data management company. Pelmorex owns and operates the weather brands The Weather Network, MétéoMédia, Eltiempo.es, Clima, and Otempo.pt. It also operates Canada’s National Alert Aggregation and Dissemination System, part of Alert Ready. Through constant innovation and entrepreneurship, Pelmorex has grown to reach consumers around the globe, has become one of the largest weather information providers and has broken new ground in providing data solutions and insights to businesses. Through harnessing the value of weather, Pelmorex is driven to make the world smarter and safer for consumers and businesses. 

To learn more, visit pelmorex.com and follow us on X (platform formerly known as Twitter), Instagram and LinkedIn.

About Home Hardware Stores Limited

Founded 60 years ago in St. Jacobs, Ontario, Home Hardware Stores Limited is proudly Canadian and the country’s largest Dealer-owned and operated home improvement retailer with more than 1,000 stores operating under the Home Hardware, Home Building Centre, Home Hardware Building Centre and Home Furniture banners. The Home Hardware Dealer network improves life at home by providing superior home improvement retail experiences through helpful advice and a deep understanding of the communities they serve. Home Hardware Stores Limited is designated as one of Canada’s Best Managed Companies and recognized as one of Canada’s Best Employers. More information about the company is available at homehardware.ca.

SOURCE Pelmorex Corp.

https://stmdailynews.com/category/tech

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