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Of the three companies that have ever installed investor-overriding mission guardians in a for-profit structure, one ended in spectacular failure, one already melted down once, and the third filed confidentially an IPO on Monday.<\/p>\n
A new Harvard Law paper, AI Corporate Governance and Ben & Jerry\u2019s Risk, by professor Jesse Fried and S.J.D. candidate Idan Reiter, lands not just as Anthropic enters the public markets but at a moment when OpenAI\u2019s governance is under more scrutiny than ever. A federal jury ruled against Elon Musk\u2019s lawsuit on May 18; former board members testified about being misled by CEO Sam Altman; and the company faces multiple wrongful death lawsuits alleging ChatGPT contributed to self-harm and violence. Meanwhile, OpenAI completed its conversion to a public benefit corporation last October, a restructuring Fried argues doesn\u2019t solve the underlying problem.<\/p>\n
The Ben & Jerry\u2019s precedent<\/p>\n
The paper\u2019s authors call it the \u201cBen & Jerry\u2019s risk,\u201d or the danger that mission guardians will not only harm investors, but also achieve the exact opposite of what they set out to do. When Unilever acquired Ben & Jerry\u2019s in 2000, it agreed to install self-perpetuating independent directors who could override Unilever to protect the brand\u2019s social mission.\u00a0<\/p>\n
For two decades, tensions stayed behind closed doors. Then in 2021, the independent board announced it would not renew the license of Ben & Jerry\u2019s Israeli licensee, over Unilever\u2019s objections. Counterboycotts, state divestments, activist investor interventions, lawsuits, and the resignation of Unilever\u2019s CEO all came next, just as the company lost billions in market value.<\/p>\n
Fried and Reiter argue that the guardians\u2019 actions backfired entirely. Unilever overrode the directors in 2022 and gave the Israeli licensee rights to sell Ben & Jerry\u2019s in Israel and its controlled territories in perpetuity, which is exactly what the directors had tried to prevent. Unilever then spun off its ice cream businesses altogether, ensuring the guardians could never impose costs on the parent company again. <\/p>\n
The parent company fired Ben & Jerry\u2019s CEO after a battle of political issues, with Unilever at the time having \u201cinformed the Independent Board\u201d of the change. This caused the brand\u2019s namesake Jerry Greenfield to quit during the public dispute, and the July 2021 boycotts that ensued saw Unilever\u2019s market cap dropping by $20 to $26 billion in the months that followed. The stock fell 8% in the first week alone, and was down more than a fifth over the following six months. More so, seven states (Florida, Texas, New York, New Jersey, Arizona, Illinois), divested pension fund holdings, totaling almost $1 billion.<\/p>\n
\u201cBasically these people could do whatever they wanted, no matter how much damage it would inflict on Unilever, and they couldn\u2019t easily be removed,\u201d Fried told Fortune. He called it \u201can ill-considered arrangement\u201d that he assumed no one would ever replicate. Enter OpenAI.<\/p>\n
OpenAI\u2019s same structure and same problem<\/p>\n
Before its 2025 restructuring, OpenAI had nonprofit directors controlling a for-profit subsidiary, the same architecture in a different industry. The board fired Sam Altman in November 2023, reportedly in part over safety concerns, which then led to nearly all of OpenAI\u2019s 770 employees threatening to leave for Microsoft, thus forcing the board to reverse course. Altman returned, the safety-focused board members were pushed out, and prominent safety researchers eventually departed to start competing ventures.<\/p>\n
\u201cI\u2019m not saying these people were bad people, or they did the wrong thing,\u201d Fried said. \u201cI\u2019m just saying, if you look at it in retrospect, they not only put investors at risk but achieved the exact opposite of their mission, as they saw it. They thought that Sam Altman could not be trusted to lead a safe OpenAI. He\u2019s still there. All the board members who cared about safety are gone. Leading AI researchers who were more concerned about safety have left. So it seems like overall safety has been harmed by the guardians\u2019 attempt to increase safety.\u201d<\/p>\n
The paper argues those guardians both damaged investors and undermined the very mission they were appointed to protect.<\/p>\n
The 2025 restructuring<\/p>\n
OpenAI completed its conversion to a public benefit corporation in Oct. 2025, with the nonprofit, now called the OpenAI Foundation, retaining control through the power to appoint every director on the board. The Foundation\u2019s Safety and Security Committee holds veto rights over safety-related decisions. On paper, mission governance survives.<\/p>\n
\u201cI make the argument that they\u2019re not really constrained any more than the directors were constrained in 2023,\u201d he said. The current board was selected by Altman himself. Nearly every Foundation director also sits on the board. Fried concedes that \u201cthey\u2019re probably not going to do anything crazy\u201d in the near term, but argues that governance structures need to be evaluated over decades, not based on the current cast of characters.<\/p>\n
\u201cWhen you\u2019re building a governance arrangement, it has to work for the long term,\u201d he said. \u201cYou have to look beyond who are the people there now, and imagine successors who are not as congenial. The world\u2019s going to change. That\u2019s what happened at Ben & Jerry\u2019s.\u201d<\/p>\n
One detail that has drawn attention from critics: OpenAI removed the word \u201csafely\u201d from its mission statement during the restructuring. Fried considers this less significant than it might appear. \u201cI think the removal of the word \u2018safely\u2019 from the mission statement is not that consequential,\u201d he said. \u201cThe Foundation is still mandated by state attorneys general to focus on safety and security, and retains veto rights on those issues. I just don\u2019t think it\u2019s going to make a huge difference.\u201d<\/p>\n
What concerns him more is the structural trajectory heading into an expected IPO. \u201cIf OpenAI has difficulty pulling off an IPO at a reasonable valuation because of its structure, it wouldn\u2019t surprise me if OpenAI goes back to the attorneys general and asks to have the October 2025 agreement modified,\u201d he said. \u201cSam Altman seems to be quite effective at getting what he wants.\u201d<\/p>\n
Anthropic\u2019s IPO and kill switch<\/p>\n
On Monday, Anthropic confidentially filed for an IPO, beating OpenAI in a cat and mouse game of one-upmanship in recent months as the two companies continued to grow their valuations by the billions. Anthropic, the paper argues, is the better model, though not because it solved the underlying tension. Like OpenAI, Anthropic pairs a controlling mission entity (the Long-Term Benefit Trust) with a public benefit corporation. Save for one key difference: supermajority of Anthropic\u2019s investors can terminate the Trust and remove the directors it appointed.<\/p>\n
Fried said this kill switch is what makes the arrangement workable. \u201cIt puts a constraint on the guardians, because they don\u2019t want to be thrown out,\u201d he said. \u201cIf investors really don\u2019t like what the guardians are planning to do, I expect the guardians will back off,\u201d adding that \u201cthe guardians have some power and they use it to push things in a certain direction, but they can\u2019t go too far.\u201d<\/p>\n
The Trust\u2019s powers are also more limited than OpenAI\u2019s Foundation. It can only nominate a majority of the board, not the entire board, and certain decisions require a supermajority at the board level, further diluting guardian control.<\/p>\n
Still, Fried acknowledged a key caveat: Anthropic hasn\u2019t been tested yet. The kill switch is a theory about what will happen under pressure. \u201cIf Anthropic works for 10 or 15 years, maybe somebody will use a structure like that again,\u201d he said. \u201cBut otherwise I don\u2019t see it.\u201d<\/p>\n
No one elected to have this structure<\/p>\n
One of Fried\u2019s most pointed observations is that OpenAI\u2019s current governance wasn\u2019t really chosen by anyone. \u201cOpenAI didn\u2019t choose its arrangement except for the initial nonprofit structure. After that choice was made, OpenAI was constrained in how it could evolve in response to the need for funds,\u201d Fried said. \u201cOnce OpenAI needed funds, there was never a point in time where people looked at OpenAI\u2019s for-profit arm and said, this is the best of all possible worlds. It\u2019s like the best that could have been done, given the constraints.\u201d<\/p>\n
Anthropic, by contrast, was designed with intention. \u201cThey could have chosen whatever structure they wanted. They chose this structure,\u201d Fried said, adding the arrangement carries real costs even when working as intended: \u201cInstead of having just a founder CEO and investors make decisions, management and investors now also need to get buy-in from the Trust or the directors it appoints. In a fast-moving business, that can throw sand in the gears.\u201d<\/p>\n
And IPO ahead<\/p>\n
Only three firms have ever installed investor-overriding mission guardians in a for-profit context. Ben & Jerry\u2019s ended in what Fried and Reiter call a spectacular failure. OpenAI\u2019s version has already melted down once and is structurally contested heading into an IPO. Anthropic\u2019s is untested and comes with a kill switch that may render it moot under real pressure.<\/p>\n
The paper notes that when safety-focused researchers like Ilya Sutskever and Mira Murati left OpenAI to found their own companies, neither adopted a guardian structure. The sample size is three, and of those, two have failed or been effectively neutered, and a third just filed for IPO.<\/p>\n
#Harvard #Law #Anthropic #sell #safety #mission #Wall #Street #veto<\/p>\n","protected":false},"excerpt":{"rendered":"
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