OpenAI (2023): Purpose vs Profits
| Case Code: ITSY145 Case Length: 13 Pages Period: 2018-2023 Pub Date: 2025 Teaching Note: Available |
Price: Rs.400 Organization: OpenAI Industry: Technology & Communications Countries: United States Themes: Artificial Intelligence, Technology Development, Business Models,Technology Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Pivot to a Capped For-Profit Model
In early 2018, Musk felt that OpenAI had fallen fatally behind its competitor, Google, and offered to take control of OpenAI. However, Altman and other co-founders rejected Musk’s proposal. After his proposal was turned down, Musk walked away from the company and cut all financial ties, despite having promised to contribute US$1 billion in funding over several years. In a Tweet, Musk cited a conflict of interest and prioritization of his other businesses, SpaceX and Tesla, as his primary reasons for distancing himself from the research company..
Groundbreaking AI Innovations
Since its inception, OpenAI had developed several generative AI models that could be used by businesses as well as developers in developing AI applications. A major breakthrough came about two years after the company was created..
Balancing Profits and Purpose
After its initial claims about building safe AI, some analysts felt that OpenAI had made an abrupt turnaround and seemed to have wandered far away from its altruistic, not-for-profit mission. Initially, its employees treated AI research not as a job but as an identity and subscribed to the rational philosophy of “effective altruism.”..
Altman’s Challenges
Altman was aware of the challenges ahead. He was passionate about ensuring that the AI models being built, deployed, and used were safe and beneficial to humanity. He was aware that ChatGPT interactions involved sensitive user data and its misuse could compromise privacy or result in data breaches..
Exhibits
Exhibit I: Corporate Structure of OpenAI
Exhibit II: OpenAI Charter
Exhibit III: ChatGPT’s Growth Rate
Exhibit IV: Road to 100 million Users for various Platforms
Exhibit V: ChatGPT User Decline (March 2023-July 2023)
Exhibit VI: AI Market Size (2022-2032)
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