Elon Musk’s artificial intelligence company xAI organized in Nevada as a for-profit benefit corporation, The Information reported on Tuesday. The company behind the Grok chatbot is the latest AI startup to give itself an unusual corporate structure that, on paper, prioritizes the public good alongside its profits, following in the footsteps of OpenAI and Anthropic.
The general purpose of xAI is to “create a material positive impact on society and the environment, taken as a whole,” the company said in the Nevada filing.
Three of America’s leading artificial intelligence companies have designated themselves as benefit corporations or non-profit organizations. OpenAI, Anthropic, and xAI have all deemed artificial intelligence too dangerous to maximize profits above all else—or at least, that’s what they’d like you to believe.
The sentiment is morally righteous, but don’t be fooled, these companies are generating enormous amounts of cash and aiming to generate much more. Anthropic reportedly is projecting $US850 million of revenue in 2024, and OpenAI is seeking a valuation of $US100 billion. The drama at OpenAI, where Altman’s profit-seeking branch seemed to overpower the non-profit board, casts a shadow of doubt over all claims from rich AI startups supposedly benefiting society.
Elon Musk’s xAI was founded to be a “free-speech” chatbot designed for “people of all backgrounds and political views”—whatever that means. Meanwhile, Anthropic was founded because OpenAI was not focused enough on safety, and aims to “help people and society flourish.” And OpenAI saw major players like Google as too profit-centric, and was founded to “ensure that artificial general intelligence benefits all of humanity.” So everyone claims that everyone else is morally inferior, and their startup is the path to humanity-saving artificial intelligence.
A benefit corporation, like xAI and Anthropic, may have certain legal advantages compared to a public company. The Nevada Legislature states “no person may bring an action or assert a claim against a benefit corporation or its directors or officers.” That seems to mean no exterior body or individual can hold xAI accountable for these claims of “benefitting society.” Any claims against the company must come from an internal director or large shareholder through a “benefit enforcement proceeding.” That’s very different from a traditional public company, like Apple or Google, which is regulated by the SEC and has many small shareholders to hold it responsible as well.
AI startups are shaping up to be the morally righteous vehicles that generate profits for regular companies. While xAI must serve humanity, Elon Musk’s Grok is a feature on his social media platform X, a private corporation that hopes to profit with no obligation to serve society—though it claims to. Investors in X will own 25% of xAI, according to The Information. The same goes for Anthropic, which received over $US6 billion in funding from Google and Amazon. And of course, Microsoft and OpenAI’s relationship has caught the attention of regulators.
OpenAI, Anthropic, and xAI have made a near-unanimous bet that trust will be a huge factor in which AI products the world chooses to work with. These startups know they will have a dramatic impact on society, and they’re gearing up to position themselves as the good guys. If that all goes to plan, it would certainly be a first for Silicon Valley.