OpenAI, the artificial intelligence startup valued at $86 billion by private investors, has released its latest financial report, revealing that its revenue for last year was just $44,485. This figure was disclosed in the nonprofit parent's 990 filing with the Internal Revenue Service (IRS), a form required for tax-exempt organizations. The filing, which was made public by the website PlainSite, highlights the lack of transparency surrounding OpenAI's finances.
Unlike for-profit companies, nonprofits are not required to provide audited financial statements. OpenAI was able to avoid submitting audited financials for 2022 in its home state of California because its stated revenue fell below the reporting threshold of $2 million. However, the last time OpenAI filed with the state in 2017, its revenue was $33.2 million, more than 700 times what it reported for 2022.
OpenAI, which was created as a nonprofit in 2015, established a for-profit entity in 2019 to raise outside funding and develop commercial products like ChatGPT, a popular chatbot. The for-profit side of the organization is responsible for generating revenue, while the nonprofit side focuses on building safe and beneficial artificial general intelligence.
The recent leadership turmoil at OpenAI, which saw CEO Sam Altman fired and then reinstated, has raised questions about the nonprofit's future. Some experts argue that OpenAI should abandon its nonprofit status if it wants to operate more like a startup. Others, like Thad Calabrese, a professor at New York University, believe that OpenAI's financial reporting should be more comprehensive to provide a holistic view of the organization.
The confusion surrounding OpenAI's financials has led to calls for more transparency. Mark Surman, president of the Mozilla Foundation, another nonprofit in the tech industry, emphasized the need for OpenAI to be more transparent if it wants to be seen as a public institution serving humanity.
Despite the financial uncertainties and leadership disputes, OpenAI's value continues to rise. An active tender offer is expected to value the company at $86 billion, and it has raised billions of dollars from investors like Microsoft.
As OpenAI seeks to enhance its governance structure and strengthen its mission, the scrutiny from regulators like the Federal Trade Commission (FTC) and the UK's Competition and Markets Authority (CMA) over Microsoft's investment in the company adds another layer of complexity to its future.