OpenAI

OpenAI is an American artificial intelligence (AI) research organization consisting of two entities: OpenAI Inc., a nonprofit research segment, and OpenAI Global LLC, a for-profit subsidiary established to commercialize its AI technologies and applications. It was founded in 2015 by a consortium of researchers, scientists, and entrepreneurs; among the more notable founders are Sam Altman, Greg Brockman, Peter Thiel, and Elon Musk.

OpenAI’s ambitious pursuit is the development of artificial general intelligence (AGI)—an evolved (and theoretical) iteration of AI that gives machines the adaptive ability to learn, understand, and apply intelligence to tasks across multiple domains in a manner that’s similar to, or exceeds, human capacity.

Although OpenAI’s declared goal is to develop AGI technology that “benefits all of humanity,” its potential to “outperform humans at most economically valuable work” has sparked debate regarding the broad disruptive effects—including the benefits and the risks—that such technologies could have on society, the economy, and the political landscape.

OpenAI product lineup

OpenAI’s product suite is anchored by the pairing of large language models (LLMs)—with data sets so massive they’re measured in petabytes—and natural language processing. These allow the models to respond to user prompts in human language (as opposed to computer programming language).

ChatGPT is an artificial intelligence chatbot that can understand and generate natural language in order to engage in human-like communications, specifically in its responses to user prompts. The most advanced iteration (as of 2025), based on OpenAI’s GPT-4 model, is capable of web scraping, using bot programs to extract data from public websites and store it in a structured, usable format).

DALL-E is an AI system that can create and manipulate images and visual art from natural language descriptions. The latest versions, DALL-E 2 and DALL-E 3, vary in capacity and policy (for example, DALL-E 3 will decline requests to mimic the style of a living artist).

Whisper is an open source machine learning model designed to automatically transcribe audio files and speech.

Codex is an AI model designed to understand and write human-readable code. Most notably, it’s the AI system powering GitHub Copilot, a tool that developers can use to write code in various languages and frameworks.

2015: Founding and nonprofit years

OpenAI was founded in December 2015 as a nonprofit organization dedicated to researching and advancing AI technology. Founded by a consortium of technologists and entrepreneurs, its key leadership included Sam Altman, Greg Brockman, Ilya Sutskever, and Elon Musk. Other investors were entrepreneur Peter Thiel and business entities such as Amazon Web Services (AWS), Infosys, and YC Research. These early commitments allowed OpenAI to begin with a $1 billion war chest to fund its research and operations.

OpenAI’s mission was to advance AI development in a manner that would “benefit humanity as a whole.” The nonprofit status was designed such that its early stages would be free of financial expectations or the obligation to turn a profit.

2016–2018: Experimentation leading to rapid product milestones

Although the company was relatively new, OpenAI’s funding commitment gave it the remarkable ability to offer competitive salaries to attract and retain top AI talent from Silicon Valley and beyond.

In just a few years’ time, OpenAI’s research and experimentation led to the accelerated development of innovations and products in the AI space, starting with its 2016 release of OpenAI Gym—a Python toolkit for designing “reinforcement learning” algorithms.

In 2017, OpenAI invested an estimated $7.9 million in cloud computing, which represented a significant portion of the company’s operational expenses that year. This was a pivotal strategic move, as cloud technology provided the kind of computational power and virtual scalability necessary for the rapid development of advanced AI models.

Not only did this accelerate research and improve efficiency; OpenAI’s entry into cloud computing also paved the way for future collaborations, most notably with Microsoft, whose Azure cloud computing platform would prove critical in its future funding, development, and organizational reshuffling.

In 2018, Elon Musk departed from OpenAI’s board. Although Musk initially cited a potential conflict of interest with his company Tesla, for which he served as CEO, reports later surfaced alleging internal conflicts as the reason for his departure. Musk would later become a vocal critic of OpenAI and AI technology in general.

In the same year, OpenAI unveiled the generative pre-trained transformer (GPT)—the first iteration of its generative large language model trained on a large and diverse body of textual information. Four years and two iterations later, the GPT language model would be released to the general public, rapidly revolutionizing almost every industry that utilizes text and code.

2019–2021: Moving toward commercialization

As OpenAI continued developing its AI technologies, it learned that its anticipated cost of production would exceed the capital it was able to raise through standard nonprofit channels. In 2019, OpenAI set up an unconventional hybrid nonprofit and for-profit model with a commercial arm that would allow it to raise more capital. Following this transition, OpenAI entered into a strategic partnership with Microsoft, which included a broad $1 billion commitment supporting their broader collaboration.

The following year, 2020, would see the beta release of its conversational AI chatbot, GPT-3. This third iteration—among the most advanced AI models for processing language and generating human-like text—would later power OpenAI’s flagship ChatGPT platform.

In 2021, OpenAI released two of its more acclaimed products—DALL-E and Codex—both marking significant, if not pivotal, advances in image and code generation from natural language prompts. Although both platforms featured new and arguably disruptive functions within specific industries, it would be the following year when OpenAI would release a product that would disrupt nearly every industry, rattling the foundations of digital-age labor and heralding the call for more comprehensive regulation and oversight.

2022–2023: Spearheading the AI renaissance

In November 2022, OpenAI launched its ChatGPT model, making it widely available to the general public. ChatGPT’s transformative impact on society at large was immediate. It was able to generate natural language in a wide variety of textual styles and genres using OpenAI’s most advanced models. ChatGPT also demonstrated some capacity to pass college-level and professional licensing exams in fields such as medicine, law, business, and other general subjects.

ChatGPT failed several exams, but its natural language processing (NLP) capabilities and vast knowledge base raised concerns that it could replace human responses—and, eventually, a large segment of the workforce.

The feared dystopian narrative of machines replacing humans remains a matter of speculation and debate. But many proponents argue that AI technology, if not a replacement for human labor, may at least create a divide between human workers capable of accessing and working with AI and those without it.

November 2023: Controversy, followed by a new regime

In November 2023, OpenAI’s board of directors briefly ousted Altman as CEO and stripped Brockman of his position as board chair. Mira Murati, the company’s chief technology officer (CTO), was named interim CEO. A swift backlash, both internally (among OpenAI employees) and externally (namely, from Microsoft, which owns 49% of OpenAI’s for-profit arm), led to the reinstatement of Altman as CEO and Brockman as president.

The board’s reconstitution in late 2023 resulted in:

• Bret Taylor becoming chair
• Larry Summers, former Treasury secretary and president emeritus of Harvard University, joining as a member
• The addition of a nonvoting observer from Microsoft

The change in board makeup marked the next stage in OpenAI’s evolution, particularly as it relates to its bifurcated nonprofit/for-profit hybrid status. As the sophisticated research and computing power used to support the company’s large language models continues to grow, the emergence of a deep-pocketed commercial entity such as Microsoft was a natural step. The transition of the company mandate from nonprofit to for-profit comes with strings attached, including the desire for a return on investment, but also increased regulatory scrutiny.

2024: Partnerships, product launches, and departures

Ilya Sutskever, cofounder and chief scientist who was involved in Altman’s ouster (but later expressed regret), resigned in May 2024 and was replaced by Jakub Pachocki, the company’s director of research. Murati, who had returned to her position as CTO after the November 2023 shake-up and reversal, announced her departure in September 2024. In their resignation announcements, both Sutskever and Murati indicated a desire to embark on their own projects.

Other departures included chief research officer Bob McGrew and vice president of research Barret Zoph. Both resignations coincided with Murati’s departure, and both were driven by interests to pursue other opportunities. Although these departures may have been decided independently and amicably, they coincided with the company’s planned restructuring into a for-profit entity, suggesting that the directional shift may have influenced the leadership changes.

2024 also brought several new partnerships:

• In January, OpenAI partnered with Arizona State University. This marked the company’s first collaboration with a higher education institution, granting full access to ChatGPT Enterprise for operational and educational purposes.
• In May, OpenAI announced its collaboration with Reddit (RDDT), offering new AI-powered tools for moderators and users.
• Also in May, OpenAI entered into a five-year licensing deal with News Corp (NWS), a deal that allowed OpenAI to use current and archived content published by News Corp–owned publications including The Wall Street Journal, Barron’s, and others.
• In June, OpenAI announced its partnership with Apple (AAPL) at the latter’s Worldwide Developers Conference (WWDC) 2024. The collaboration will integrate ChatGPT features into Siri and various other Apple system applications. 

In addition to these partnerships, OpenAI acquired video communication and collaboration platform Multi in June and the Web domain Chat.com in November.

OpenAI also introduced several major releases in 2024, including:

• SearchGPT, an AI-powered search engine
• GPT-4, its latest LLM capable of generating text, images, and audio in addition to advanced multilingual audio speech recognition and translation
• OpenAI o1, a new series of AI models featuring reasoning capabilities that exceed those of previous models
• ChatGPT Pro, a premium subscription model that features OpenAI o1 reasoning

2025: Rising tensions and high-stakes deals

The following year brought both heightened scrutiny and bold strategic moves. In February, the U.S. Securities and Exchange Commission opened an investigation into Altman to determine whether the CEO had misled investors during the temporary shake-up in late 2023.

A group of current and former employees in June filed an open letter calling for more transparency about the risks posed by AI models and greater protection for whistleblowers and others who speak up about company practices.

Also, a lawsuit brought by Elon Musk accused the company of anticompetitive practices in its transition to for-profit status, saying that the company had shifted its priorities toward profit and away from its original mission.

In February 2025, Musk and a consortium of investors made a $97.4 billion bid to take control of OpenAI. The move added yet another chapter to the ongoing rivalry between Musk and Altman. At the same time, OpenAI was in advanced talks with SoftBank for a $40 billion funding round at a $300 billion valuation.

In May 2025, OpenAI agreed to acquire IO, an AI hardware start-up founded by former Apple design chief Jony Ive, for $6.5 billion. The deal, subject to regulatory approval, would bring Ive and his collective, LoveFrom, into a central design role at OpenAI. Altman described the effort as aiming to create “a new category of personal computing devices,” with product details expected in 2026.

Also in May, OpenAI released ChatGPT-4o (“omni”), which can process and generate text, images, and audio in real time—a type of AI known as a multimodal model.