TLDR;
- Delaware’s Attorney General is hiring an investment bank to independently evaluate OpenAI’s restructuring.
- The conversion into a $300B public-benefit corporation faces mounting regulatory and legal scrutiny.
- Elon Musk’s legal pressure and valuation demands have added complexity to the approval process.
- If delays extend into 2026, OpenAI risks losing a major funding lifeline from SoftBank.
OpenAI’s ambitious plan to convert into a $300 billion public-benefit corporation is facing fresh regulatory headwinds, as the Delaware Attorney General moves to independently evaluate the fairness of the nonprofit’s equity stake in the new entity.
The added layer of scrutiny could slow the already complex restructuring process, which is being closely watched by regulators, investors, and legal challengers, most notably, Elon Musk.
Notably, the Attorney General’s office is reportedly hiring an investment bank to conduct its own valuation of the stake OpenAI’s nonprofit parent would retain after the conversion. While OpenAI and Microsoft have already brought on advisors to steer the process, Delaware’s insistence on a third-party evaluation underscores rising concerns about governance, transparency, and fiduciary responsibility in one of Silicon Valley’s most high-profile corporate overhauls.
Musk’s Legal Fight Intensifies Pressure
Complicating matters further, Elon Musk has been waging a legal and public campaign to derail or radically alter the restructuring. In January, Musk’s attorney sent letters to both California and Delaware attorneys general urging them to force an open auction of the nonprofit’s stake. The argument was that anything less could undervalue the stake by tens of billions of dollars and violate the nonprofit’s obligations.
Musk, a co-founder and early funder of OpenAI, has accused CEO Sam Altman and Microsoft of exploiting the nonprofit structure for private gain. He has launched multiple lawsuits, including an attempt to obtain a preliminary injunction in California that could delay or block the restructuring entirely.
Elon Musk on pushing ahead with the lawsuit against OpenAI?
"Yes. It was intended to be a non profit open source company and now they're trying to change that for their own financial benefit to a for profit company that is closed sourced." pic.twitter.com/nkHavXYnWg
— Tesla Owners Silicon Valley (@teslaownersSV) May 20, 2025
OpenAI, for its part, has maintained that its transition into a public-benefit corporation (PBC) will preserve its mission while unlocking vital capital to scale AI infrastructure globally.
Big Money and a Ticking Clock
Time is not on OpenAI’s side. As part of a $6.6 billion funding round in 2024, OpenAI committed to completing its conversion within two years. Missing that deadline could trigger investor clawback provisions and threaten up to $20 billion in potential financing from partners like SoftBank.
Microsoft, which has invested over $13 billion in OpenAI, holds significant sway in the outcome and has reportedly disputed how equity will be distributed in the new entity. OpenAI has said it plans to gradually reduce Microsoft’s share of revenue from 20% to 10% by 2030, but the tech giant retains veto power over major corporate decisions during the transition.
The company’s Stargate initiative, a global expansion involving AI chips, data centers, and potentially 100 million AI devices, depends heavily on the restructuring being completed on time. Any regulatory delay could stall these aggressive expansion plans.
High-Stakes Restructuring
Founded in 2015 as a nonprofit, OpenAI launched its for-profit subsidiary in 2019 to raise outside capital, and now seeks to align its corporate structure with its evolving ambitions. The conversion into a PBC is meant to formalize that shift, with the nonprofit focusing on philanthropic initiatives while holding equity in the commercial arm.
Still, Delaware authorities have made clear their duty is to the public interest, not just corporate efficiency. Kathleen Jennings, the Delaware AG, has emphasized that her office must ensure the transaction is fair and in compliance with legal obligations.
OpenAI insiders suggest the process could still take months, as final valuations, equity allocations, and regulatory approvals remain unresolved. Meanwhile, some observers believe Musk’s increasingly aggressive legal posture is aimed less at fairness and more at disrupting a rival, particularly as his own AI firm, xAI, competes directly with OpenAI in the commercial AI arms race.
