Meta urges California attorney general to stop OpenAI from becoming for-profit, WSJ reports

(Reuters) -Meta Platforms is urging California’s attorney general to block OpenAI’s planned conversion to a for-profit company, the Wall Street Journal reported on Friday.

In a letter to Attorney General Rob Bonta dated Thursday, Meta (NASDAQ:) said that allowing OpenAI to become a for-profit company would set a dangerous precedent of allowing startups to enjoy the advantages of nonprofit status until they are poised to become profitable, WSJ reported.

“OpenAI’s conduct could have seismic implications for Silicon Valley. If OpenAI’s new business model is valid, non-profit investors would get the same for-profit upside as those who invest the conventional way in for-profit companies while also benefiting from tax write-offs bestowed by the government,” the WSJ report quotes Meta as saying in the letter.

Meta and the California AG’s office did not immediately respond to a Reuters request for comment.

Earlier on Friday, OpenAI asked a federal judge in California to reject a request by billionaire Elon Musk to halt the ChatGPT maker’s conversion to a for-profit company.

Musk sued OpenAI and its CEO Sam Altman in August, claiming they violated contract provisions by putting profits ahead of the public good in the push to advance AI.

In November, Musk asked U.S. District Judge Yvonne Gonzalez Rogers (NYSE:) in Oakland for a preliminary injunction blocking OpenAI from converting to a for-profit structure.

“While our work remains ongoing as we continue to consult independent financial and legal advisors, any potential restructuring would ensure the nonprofit continues to exist and thrive, and receives full value for its current stake in the OpenAI for-profit with an enhanced ability to pursue its mission,” OpenAI chairman Bret Taylor said in a statement.

In its letter, Meta said it supported an effort by Musk to represent the interests of the public in deciding whether OpenAI will be allowed to become a for-profit company, the WSJ report added.

Musk, who was an OpenAI co-founder, has since launched a competing artificial intelligence company, xAI.