Sources informed Bloomberg that OpenAI has started preliminary talks with the California attorney general's office over changing its present nonprofit organization to a for-profit company model. Supported by Microsoft (NASDAQ:MSFT), the $157 billion AI business will likely come under regulatory scrutiny over the value of its intellectual property, especially its flagship product, ChatGPT.

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Additionally, Delaware's attorney general is also in correspondence with OpenAI while over the potential restructuring. Originally established as a nonprofit AI research facility in 2015, OpenAI established a capped for-profit company in 2019 in order to raise money for expensive AI model building. In a letter to Bloomberg, OpenAI's nonprofit board chairman, Bret Taylor, said "Any potential restructuring would ensure the nonprofit continues to exist and receives full value for its stake in the for-profit unit." Aimed at luring investors, the shift would keep a nonprofit arm with meaningful ownership in the new company, according to OpenAI strategy chief Jason Kwon.

The restructuring procedure will probably take a lot of time since asset value will determine regulatory permission. OpenAI has until 2026 to finish the shift under current financing terms; otherwise, the funding will turn into debt, according to The New York Times.

This article first appeared on GuruFocus.