Bill to block OpenAI's for-profit conversion gets mysteriously gutted
42 comments
·April 7, 2025wateringcan
bumblebees
[dead]
thaumasiotes
I would have liked to read something about the legal mechanics here. The bill has had the entirety of its text removed, and the text has been replaced with a thoroughly trivial change to the required procedure for selling aircraft under some circumstances. (Instead of posting public notice in three public places, you have to post it in five public places.)
Obviously, (1) the purpose of this is to withdraw the bill; and (2) nobody really cares about the adjustment to the sale procedure.
So I can infer that replacing the bill with an unrelated bill of the same name is easier than replacing it with nothing at all. But why is that?
BrenBarn
My understanding is that it's a way to game the system of legislative procedure. Basically if the original bill went through certain steps in the process (like committee votes), the gutted-and-amended one still "counts" as having gone through those steps, and doesn't have to start over. This means it can be passed more quickly. In theory there are ways to insist that it must start over, but in practice it's not done.
thaumasiotes
> This means it can be passed more quickly.
Is that a goal here? I'm hypothesizing that this maneuver has been done in order to withdraw the original bill, not in order to pass the new bill. I assume that if the new bill fails, the maneuver will have succeeded.
The question is why this was easier than actually killing the original bill.
m463
sort of how software updates work after an app sellout happens.
renewiltord
Haha, that's perfect. Or the Boeing 737 MAX.
odo1242
~~This is kinda ridiculous, especially considering the bill wouldn’t even affect OpenAI itself (that would make it an ex post facto law) but just close the loophole for the future.~~ (edit: I misread)
I say this as a user of AI, I’ve seen the nonprofit structure get abused way too much for my liking. Not that I have any solutions to the problem though.
ipsum2
Why wouldn't it apply? From what I can tell, openai is still (ostensibly) a non-profit
zo1
The word "non-profit" is the problem. People assume it means charity or "company that does good without seeking profit" or some similar variation.
Instead, they are basically government-codified vehicles for tax, accounting and coordination purposes that allow laundering of money through plausible salaries and plausible expenses in the process of doing their stated "good deed". The "good" they do is secondary, as they are essentially entities that need want and are encouraged to self-perpetuate. Remember, the salaries and expenses go out first before the actual charity portion.
Without quibbling over definitions and tax-terms, I'd say the same essentially applies to "charities" and "churches" and "religious organizations".
loteck
It's called a gut and amend procedure. Welcome to the California legislature!
[0] https://capitolweekly.net/the-micheli-files-gut-and-amend-bi...
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jasonm23
Something is mysterious? ... IS corruption mysterious now?
ipsum2
Gary Marcus has a tendency of not telling the truth and cherry picking facts, but in this case, the bill change does seem real.
It is disgusting that he is using someone's suicide as a conspiracy theory though.
Taek
If I recall, the suicide had some highly suspicious circumstances and calls to question whether it was actually a suicide had worthwhile merit.
changoplatanero
What I heard was that it was that the poor fellow tried to shoot himself but didn't get a direct hit. Because there was some time passed between the shooting and the death, they didn't find the gun and the body in the same place that you would expect.
zombot
The coincidence just seems a bit too convenient.
infecto
I don’t recall that at all but it seems to fit well with the anti-OpenAI crowd.
There is a real question about copyright that still needs to be answered but I don’t think that discussion needs to be polluted with the tragic suicide if that person. It’s nothing more than a conspiracy at this point, something that Gary likes to do a lot.
simiones
When a whistleblower against a hugely powerful, rich, and politically connected company commits suicide, especially when his own parents believe and are trying to prove that it wasn't suicide, calling it "using someone's suicide as a conspiracy theory" is really hiding at least half the story.
HenryBemis
I feel that there a few people (wielding extreme power) in this world that are/were cancer for humanity. Hitler (obviously), Stalin (obviously), Mao (obviously). Two more that don't have blood on their hands (debatable for Zuckerberg - Myanmar) but have messed up plenty of lives are Zuckerberg (already done - through action, inaction, and corruption) and now Altman (about to do - through action, and corruption).
Every time his name is in the new I 'like' him less and less.
I hope some 'wise king' will stop him, or at least slow him/them down until controls are in place. We cannot have a "move fast/break things" for _this_ newest technology.
I totally admire the 'setup' that US has, making it the 'best inventor' in the world (gathering talent, giving them the tools/funding/environment to thrive), but this reminds me the Hellhounds from Supernatural. We don't see them, but they are out to get us.
I foresee the future.. Altman will be on Joe Rogan in a couple of years from now stating how he was 'tricked' into making the mistake (a la Zuck), which caused upset, and havoc, and ....
As for Diana Papan.. I will go ahead an imagine that she secured the funding she needs for her next campaigns!! And so the lobbying (aka legal bribing/buying politicians) continues!!!
wodenokoto
Pol Pot, Genghis Khan.
I really fail to see how converting OpenAI to what it de facto is - a for profit company - places Altman in this group of people.
I do agree that they need to pay taxes, equivalent of what they'd paid had they been a regular corporation all the time, but at worst this amounts to a bit of tax fraud, not genocide.
mentalgear
This seems like blatant corruption, based on points the article mentions:
a. Making a bill that was about AI suddenly only about "airlines"
b. this happened just after an alleged call from Altman to Diane Papan (who introduced the bill)
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The best comment/course of action I have seen on this article is from Bruce Olsen who actually took action to get journalists to notice.
If you care about fairness/the law in AI (& society), and have someone you know in journalism, I would suggest you to do the same. Or even just send an email to the office of Diane Papan (bill owner).
[0] https://a21.asmdc.org/contact-frame
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Appendix: Bruce's letter for reference
> I sent the following note to Phil Matier, GOAT California political reporter. Hope it helps.
///////
Subject: Who Got To Diane Papan on AB-501?
Phil -
I'm a longtime fan, used to listen on KCBS when I lived in the Bay Area. You, Madden, and Al Hart were my favorites. Great, great analysis, which I sorely miss.
Did Sam Altman get to Diane Papan?
Her bill preventing OpenAI from converting away from a non-profit suddenly became a bill about aircraft liens (!) Sounds like the same kind of billionaire bullshit that's going around these days.
https://open.substack.com/pub/garymarcus/p/breaking-bill-tha...
It stinks. I'm sure you'll be able to do something with this lead.
I don't have any $kin in this game. I'm retired and follow Marcus's writing, and I'm also a citizen who knows how important this is.
Bruce Olsen
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valtism
I really don't see the issue with OpenAI becoming for-profit. They started as a research group with no intention of creating a marketable product, and stumbled onto one. I think it would make sense for them to become for-profit.
rubslopes
No biggie then; they can become a for-profit when they donate everything they received as a non-profit, both tangible and intangible, with interest.
khazhoux
How does blocking their conversion help citizens? Are we saying all AI companies must be nonprofit?
JoshTriplett
No. We're saying that if an entity starts out as a non-profit saying that it's operating for the good of the world, and in the process gains goodwill and various benefits, it can't subsequently turn into a for-profit company.
xlbuttplug2
inb4 loophole to create a new company and transfer over all the non-profit's assets.. and keep the same name somehow.
somenameforme
They were not-for-profit until the potential for large-scale profit emerged, at which point they decided to become for-profit. It's taking the whole 'socialize costs, privatize profits' to an entirely new level.
The exact legalese preventing or enabling this is unclear to me, but if it became a norm then basically every for-profit startup would likely start out as a not-for-profit taking advantage of all that offers and then segueing to for-profit when big investment/sales opportunities emerge, and at this point we're making a mockery of everything these classifications are supposed to stand for.
javierluraschi
Suppose that we open a non-profit to cure cancer, you and a bunch of others give me billions, I cure cancer, great.
Then plot twist, I turn the non-profit for profit, I avoid releasing the cancer cure I promised and instead I charge you for cure.
If a non-profit promised to cure cancer to help citizens, I would want that at the very-least they remain non-profit.
lmeyerov
Fraud, false board oversight, recruiting lies, and other misrepresentations in free markets are bad for everyone in the sense that uncorrupted markets are healthier
A peculiarity of US law vs others is it follows letter-of-the-law vs spirit-of-the-law. When there is ambiguity that billionaires try to take advantage of, it helps for legislators to pass laws rather than leave it up to judicial interpretation.
milesrout
>A peculiarity of US law vs others is it follows letter-of-the-law vs spirit-of-the-law.
This is not close to true. The US legal system has many bizarre quirks (like elected judges, elected prosecutors, and a politicised judiciary) but this isn't one of them. It is a basic requirement of the rule of law that statutes are construed from their text, and not given meaning based on what judges wish their text instead was. People have the right to be able to have some level of certainty about what the law says.
lmeyerov
I don't think you're disagreeing with me. The US system is letter-of-the-law, we agree there.
The issue is when there is ambiguity. Judges must then make their own interpretation, and things get murky. In the US, spirit might be used in a hybrid spirit/letter in practice, though ultimately still grounded in literal text. Either way, my point was the role of people in dealing with ambiguity largely goes away when the law gets updated to be clear. Roe v Wade is a popular example of what happens when lawmakers fail to legislate and leave the law up for grabs.
RE:"Rule of Law", most of Europe is heavier on spirit-of-law. Both the US & EU systems seem historically strong on rule of law, irrespective of their stance on spirit vs letter. I'm not in a position to say being on one side or the other disqualifies a system from being a valid rule of law, that sounds extreme.
According to the assembly rules (if I am understanding them correctly), amendments like that are considered out of order and can be shot down with a majority vote:
"92. An amendment to any bill, other than a bill stating legislative intent to make necessary statutory changes to implement the Budget Bill, whether reported by a committee or offered by a Member, is not in order when the amendment relates to a different subject than, is intended to accomplish a different purpose than, or requires a title essentially different than, the original bill."
http://www.leginfo.ca.gov/rules/assembly_rules.pdf
That being said, it seems that typically nobody in the legislature ever cares to challenge it. I saw it happen for another bill this session too (an AI bill that became something about commercial fishing).