OpenAI denies that it’s weighing a ‘last-ditch’ California exit amid regulatory pressure over its restructuring

In Brief

OpenAI executives are discussing a potential relocation out of California as increasing political resistance threatens the company’s efforts to convert from nonprofit to for-profit status, according to The WSJ, though the company says it has no plans to leave.

California’s attorney general is investigating whether OpenAI’s restructuring violates state charitable trust law, while a coalition of nonprofits, labor groups, philanthropies, and even rival Meta are pushing back against the conversion. OpenAI has about $19 billion in funding tied to this restructuring – if it doesn’t happen, investors could walk away, which would be catastrophic for the ChatGPT maker.

Moving OpenAI out of the state would be particularly stunning given CEO Sam Altman’s deep ties to the Bay Area. He served on San Francisco Mayor Daniel Lurie’s transition team following Lurie’s election last year and reportedly owns at least four homes in San Francisco and another in Napa Valley. Such a move would also face major logistical challenges, since OpenAI’s AI researchers are heavily concentrated in San Francisco.

The company continues working with state and Delaware attorneys general on the restructuring process; in the meantime, the regulatory pressure adds to OpenAI’s existing challenges, including competing in an escalating AI talent war.