EU is fielding comments on potential market harms of Microsoft's investments.

European Union regulators are concerned that Microsoft may be covertly controlling OpenAI as its biggest investor.

  • Ephera@lemmy.mlEnglish
    41·
    10 months ago

    As I understand, OpenAI’s structure is similar to Mozilla’s, so a non-profit steers a for-profit.

    But there’s the massive difference that OpenAI’s for-profit takes on outside investors. That is where Microsoft has invested.
    As such, control over the for-profit really isn’t in the hands of the non-profit, because obviously, they have to satisfy whoever gives them money.

    In particular, it also means that unlike in Mozilla’s structure, where the for-profit is ‘neutered’ in that it can’t pay out profits to anyone, this really isn’t the case for OpenAI.

    So, all in all, I really don’t feel like the non-profit part of OpenAI has any real relevance.

    • abhibeckert@lemmy.worldEnglish
      1·
      10 months ago

      As I understand, OpenAI’s structure is similar to Mozilla’s, so a non-profit steers a for-profit.

      Right, that’s my understanding too.

      But there’s the massive difference that OpenAI’s for-profit takes on outside investors. That is where Microsoft has invested.

      Does that matter at all? Microsoft is a for-profit business, investing in a for-profit company and hoping to make a profit. Seems pretty straight forward to me.

      As such, control over the for-profit really isn’t in the hands of the non-profit, because obviously, they have to satisfy whoever gives them money.

      They have to satisfy whatever terms where in the contract signed when Microsoft invested. From what I can tell, Microsoft basically just has IP rights to the software any patents. They don’t have any control.

      In particular, it also means that unlike in Mozilla’s structure, where the for-profit is ‘neutered’ in that it can’t pay out profits to anyone, this really isn’t the case for OpenAI.

      That’s not true at all. Mozilla pays about a quarter billion dollars a year to their employees for example. They absolutely can and do user their money to pay other people.

      There are strict regulations on how a non-profit can spend their money, but they absolutely are allowed (and expected) to spend all of the money they have. Generally, a non-profit is required to clearly define some purpose that benefits the community somehow (it could be helping kids with cancer, or helping elderly people get to their doctor’s appointments, or building a better Internet (Mozilla), or trying to create AGI that benefits all of humanity (OpenAI)). Whatever your purpose is, as long as the money is spent on that it’s fine.

      However, the for-profit arm of OpenAI isn’t a non-profit. So it doesn’t have that same limitation.

      Again, I’m not a lawyer, so I don’t know if OpenAI is legally in the clear here… but I will say that I don’t see any major problems. I also don’t think it would really be the end of the world if the EU declares they’re a for-profit enterprise. In fact I’m not sure it would change anything at all. There’s nothing wrong with running a private company. You just might have to pay a bit more tax… but since OpenAI doesn’t actually make any money… they don’t have to pay any tax anyway.

      It’s also entirely possible for them to be recognised as a non-profit in some countries but not in others. Different countries, different rules. Not a big deal.