THE WINDFALL CLAUSE
Distributing the Benefits of AI
for the Common Good
Cullen O’Keefe, Peter Cihon, Ben Garfinkel,
Carrick Flynn, Jade Leung, Allan Dafoe

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THE WINDFALL CLAUSE
Distributing the Benefits of AI
for the Common Good
Cullen O’Keefe,* Peter Cihon, Ben Garfinkel, Carrick Flynn, Jade Leung,† Allan Dafoe
Centre for the Governance of AI, Future of Humanity Institute, University of Oxford
Corresponding address: cullen@openai.com
Corresponding address: jade.leung@governance.ai*†

Cite as: O’Keefe, C., Cihon, P., Flynn, C., Garfinkel, B., Leung, J., and Dafoe,
A. (2020). The Windfall Clause: Distributing the Benefits of AI. Centre
for the Governance of AI Research Report. Future of Humanity Institute,
University of Oxford. Available at: https://www.fhi.ox.ac.uk/windfallclause/

EXECUTIVE SUMMARY
Over the long run, technology has largely improved the human condition. Most of us live longer, more comfortable, and freer lives than our ancestors because of innovations from the past
two centuries. Nevertheless, the economic progress from these innovations has not arrived
equitably or smoothly. For example, the enormous wealth generated by the key technologiesof the Industrial Revolution—namely factory mechanization, steam power, and railroads—initially accrued to only a few countries and individuals. Even today, industrial wealth remains
highly unevenly distributed. In general, while technological innovation often produces great
wealth, it has also often been deeply and acutely disruptive to labor, society, and world order.
The world is likely to continue to experience both benefits and disruption from technological innovation. Advances in artificial intelligence (AI) currently warrant special attention in thisregard. A number of prominent economists have argued that AI is a rare “general-purpose
technology” with the potential to transform nearly every sector of the economy. Some havealso suggested, more speculatively, that it may ultimately produce both much higher rates ofworker displacement and much higher rates of growth than any other modern technology. In
light of ongoing advances in AI, it is imperative that we prepare for the possibility of extreme
disruption and act to mitigate its negative impacts.
This report introduces a new policy lever to this discussion: the Windfall Clause. By voluntarily
adopting the Windfall Clause, firms would bindingly agree to donate a meaningful portion of
their profits if they earn a historically unprecedented economic windfall from the developmentof advanced AI. We define a “windfall” as a level of income greater than a substantial fraction(e.g., at least 1%) of the world’s total economic output. It is unlikely, but not implausible, thatsuch a windfall will occur. As such, the Windfall Clause is designed to address a narrow setof low-probability future scenarios which, if they came to pass, would be unprecedentedly
disruptive.
Properly enacted, the Windfall Clause could address several potential problems with AI-driven economic growth. The distribution of profits could compensate those rendered faultlessly
unemployed due to advances in technology, mitigate potential increases in inequality, andsmooth the economic transition for the most vulnerable. It provides AI labs with a credible, tangible mechanism to demonstrate their commitment to pursuing advanced AI for the common,
global good. Finally, it provides a concrete suggestion that may stimulate other proposals anddiscussion about how best to mitigate AI-driven disruption.
Designing the mechanism by which funds from the Windfall Clause would be distributed would
be a significant undertaking. In this report, we enumerate desiderata for an effective and successful distribution mechanism: namely, philanthropic effectiveness, security from improper influences, political legitimacy, and buy-in from AI labs. We preliminarily propose mechanisms forachieving these desiderata and invite further discussion and ideas for how such mechanisms
could robustly achieve the moral and societal ambitions of the Windfall Clause.
Among the contributions of this report is demonstrating that the Windfall Clause is legallypermissible as a matter of American corporate law, notwithstanding corporate directors’ obligation to act in the best interests of the corporation. This is because the Windfall Clause would
be low-cost in expectation, given that obligations only vest if a lab earns windfall profits, which
is a distinctly low-probability event. Further, a commitment to the Windfall Clause could bringa lab significant benefits through better relations with employees, consumers, citizens, andgovernments.
The Windfall Clause draws inspiration from precedents in corporate practice, public policy,
and personal philanthropy. Notably, the Windfall Clause adds to an increasingly creative global
discussion centered around channeling technology-driven economic growth towards robustly
equitable and broadly beneficial outcomes. Proposals already represented in these discussions range from reforming international tax law and competition policy to experimenting withradical new models for social welfare such as a Universal Basic Income.

There remain significant unresolved issues regarding the exact content of an eventual Windfall Clause and the way in which it would be implemented. We intend this report to spark a
productive discussion and recommend that these uncertainties be explored through public
and expert deliberation so that the Clause is well crafted and inclusive. Critically, the Windfall
Clause is only one of many possible solutions to the problem of concentrated windfall profits
in an era defined by AI-driven growth and disruption. In publishing this report, our hope is not
only to encourage constructive criticism of this particular solution, but more importantly toinspire open-minded discussion about the full set of solutions in this vein. In particular, whilea potential strength of the Windfall Clause is that it initially does not require governmental
intervention, we acknowledge and are thoroughly supportive of public solutions. Thus, in theface of potentially unprecedented prosperity and disruption, we hope to expand the crucial
discussion of how to ensure that advanced AI is broadly beneficial for all of humanity.

NOTE ON TERMINOLOGY
Throughout this report, we will use the following terms as defined, unless context dictatesotherwise:• Profits: income before income taxes.1• Windfall profits: extremely high annual profits. We sometimes use ≥1% of gross world product as an indicative threshold.
• Firm: an entity that builds or utilizes AI systems capable of generating windfall profits, orattempts to do so. This could be a corporation, nation, university, or group of researchers.
However, for this report we focus on private corporate firms for both practical reasons(private firms being the current leaders in AI development) and legal reasons (the fiduciary
implications of the Windfall Clause being potentially significant).
• Signatory: a firm that has agreed to a Windfall Clause.
• Distributor: an entity that receives donated windfall funds as for further beneficial use or
distribution. Distributors are the contractual counterparties to signatories in the Windfall
Clause.

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ACKNOWLEDGEMENTS
For helpful comments and other contributions, the authors thank Emefa Addo Agawu, Philip
Trammell, Miles Brundage, Carl Shulman, Anthony Aguirre, Markus Anderljung, Haydn Belfield,
Max Daniel, Katya Klinova, Jared Brown, Ulrike Franke, and Nick Bostrom.
This work was financially supported by the Open Philanthropy Project, European ResearchCouncil (ERC) under the European Union’s Horizon 2020 research and innovation program(grant agreement No. 669751), Future of Life Institute grant RFP2-169, OpenAI, and the Berkeley Existential Risk Initiative.

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TABLE OF CONTENTS
I. Introduction
A. Context: AI as a Transformative Technology
B. Motivations
II. Designing the Windfall Clause
A. Defining Contributions: The Windfall Function
B. Distributing the Windfall
III. Legal Permissibility
A. Permissibility in the US
B. Chinese Corporate Philanthropy Law
IV. Historical Precedents
A. Precedents from CSR Practices
B. Precedents from Public Windfall Governance
C. Precedents from Personal Philanthropy
V. Objections, Alternatives, and Limitations
A. Reasons Why the Windfall Clause Might Not Work
B. Unintended Consequences of the Windfall Clause
C. Problems with the Design of the Windfall Clause
D. Alternatives to and Variants of the Windfall Clause
Conclusion
Appendix I: Other Legal Issues
Appendix II: Three Sketches of Possible Windfall Distribution Systems
Endnotes

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21
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24
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32
33
39
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TABLES AND FIGURES
Table 1: Summary of Desiderata
Table 2: Illustrative Marginal Clause Obligations
Figure 1: Global Wellbeing Windfall Fund Payment Flow
Figure 2: Windfall Trust Payment Flow
Figure 3: AI for Good Fund Payment Flow

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10
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I. INTRODUCTION
A. Context: AI as a Transformative Technology
Some economists have argued that artificial intelligence (AI) is a “general-purpose technology”(GPT), a rare class of technologies with the potential to support broad, cross-sector transformations in the economy.2 Previous examples of GPTs include the computer, electricity, and theinternal combustion engine. If AI follows in the path of previous general-purpose technologies,
we should expect a slowly building wave of productivity growth and disruption to existing industries over the next few decades.
Such change would bring enormous economic wealth. However, it is plausible that this wave
will leave a small number of firms with exceptionally large shares of relevant markets,3 withshareholders in those firms therefore receiving much of the benefit. Current AI research anddevelopment activity is already fairly concentrated within a small number of firms, which have
exceptional access to key resources such as research talent, data, and computing power. Absent substantial changes in market structure, these firms may well be positioned to capturemuch of the prospective wealth from advanced AI.
Further, this growth in economic wealth could be unprecedented in magnitude and also in
speed. In particular, the magnitude and speed of growth is likely to be substantial if AI systems
are able to substitute for human labor for the majority of economic tasks, as has been argued
by a number of prominent economists.4 AI researchers, when asked when “human-level AI” or“artificial general intelligence” will arrive, assign a significant (>25%) chance that it will be developed within the next three decades.5 If the resulting revenue were to accrue to a narrow setof actors, this could give rise to a level of inequality with no close historical analog. Thus, while
such historically unprecedented growth and wealth concentration may be unlikely, it cannot be
ruled out given the uncertainties around development timelines for AI.
The Windfall Clause is motivated primarily by these scenarios of starkly pronounced—and perhaps unprecedented—concentration of AI-generated wealth. We view it as one potential tool
for mitigating the economic, ethical, and geopolitical concerns associated with the possibilityof extreme economic and technological inequality. While the Windfall Clause is far from sufficient to mitigate these concerns on its own, we believe that it might have an important roleto play in spurring discussion and action to address these concerns. We remain interested inother mechanisms that could achieve these goals or complement the Windfall Clause.

B. Motivations
As the transformative potential of AI has become increasingly salient as a matter of public andpolitical interest, there has been growing discussion about the need to ensure that AI broadly
benefits humanity.6 This, in turn, has spurred debate on the social responsibilities of large technology companies to serve the interests of society at large. In response, ethical principles andcodes of conduct have been proposed to meet the escalating demand for this responsibility
to be taken seriously.7 As yet, however, few institutional innovations have been suggested totranslate this responsibility into legal commitments for companies positioned to reap large
financial gains from the development and use of AI.
This report offers one potentially attractive tool for addressing such issues: the Windfall
Clause.* The Windfall Clause would pre-commit AI firms to share profits from AI for the common good8 in scenarios where these profits are extreme and unexpectedly large (qualifying
them as “windfall” profits).†*†

Although we generally refer to “the” Windfall Clause, a Windfall Clause could take on various forms. See generally infra § II.
For legal and strategic reasons, we propose a Windfall Clause that would oblige firms to donate nominal—but nonzero—amounts
if they earn near-windfall profits infra § II(A)(1).

1

In this section of the report, we first outline the reasons why a Windfall Clause might be desirable from an ethical and public policy standpoint, as well as from the perspective of AI firms.
Then, the following sections of the report explain how one might implement a Windfall Clause.
Section II discusses the content of the Clause by first defining a preliminary “Windfall Function,” which would determine how much money a signatory to the Clause owes as a functionof its profits relative to gross world product, and then listing crucial considerations for the charitable distribution of that windfall.9 Section III establishes the legal permissibility of the Windfall
Clause under American corporate law.10 Finally, the last two sections add important context to
the Clause. Section IV compares the Clause to historical philanthropy and public policy efforts.
Section V closes by acknowledging the limitations of this proposal and compares it to otherproposals aimed at addressing the same problem.

B.1. Ethical and Policy Motivations
Here, we lay out the primary ethical and policy challenges that motivate the development
and implementation of the Clause. The challenges below also motivate other policy solutions
and indeed will likely require a host of solutions to fully address. We do not suggest that theWindfall Clause is the only, or the best, solution for each particular challenge. Rather, considering the scale and seriousness of these challenges—and the uncertainty around how they
will develop—we hope that contributing a policy solution targeted at specific scenarios of vast
economic windfall addresses an important, if limited, part of the solution space. Finally, we
encourage further research into all of these motivations to test their accuracy.

B.1.i. Addressing Loss of Job Opportunities
We expect the net effects of AI on aggregate wealth to be very positive due to increased productivity.11 However, many have argued that AI could lead to a substantial lowering of wages,12
job displacement, and even large-scale elimination of employment opportunities as the structure of the economy changes.13
One general consideration that supports these concerns is the strong consensus among AI researchers that most, if not all, human work can in principle be automated.14 Most AI researchers
also believe that, at some point in the future, progress in AI will make near-complete automation feasible, particularly given that the upper bound of AI capabilities likely exceeds humancapabilities.15
As some economists have argued, a world where AI systems can perform almost any task thata human worker could would likely be a world in which employment opportunities are smalland shrinking as AI capabilities progress.16 This is exacerbated by a related concern that technological acceleration may outpace individuals’ ability to retrain, such that by the time a worker
has retrained, her new skills are irrelevant.17
In the long run, AI could serve primarily as a substitute for, rather than as a complement to, labor.* While many technologies have led to periods of job displacement, few technologies have
led to large-scale persistent unemployment as valuable new ways of using human labor havepreviously emerged. However, if AI makes the near-complete automation of human labor possible,18 this would make AI a substitute for, rather than a complement to, human labor. This could
entail not just the unemployment of many or most humans, but their unemployability.19 Withan absence of meaningful job opportunities, huge numbers of people could find themselves
unable to earn a living for themselves or to support their families. This would not be due to unwillingness to work or failure to invest in skill-building,20 but rather simply due to the fact that AI
systems and complementary technologies can outperform job seekers at any productive task.21*

2

Whether AI complements or substitutes human labor depends on the elasticity of substitution between automated andnon-automated labor. If this is low (< 1), then human labor complements automated labor and wages will rise even as automation
increases. If this is high (> 1), the wage share will fall, since the economy can just substitute away from human work to automatedwork. See, e.g., Philippe Aghion et al., Artificial Intelligence and Economic Growth (2017) (unpublished manuscript), https://perma.
cc/6BWG-X5BU; William D. Nordhaus, Are We Approaching An Economic Singularity? Information Technology and the Future of
Economic Growth (Nat’l Bureau Econ. Research, Working Paper No. 21547, 2015), https://perma.cc/F3KS-RNWN.

Further, advances in AI may reduce the opportunity for poorer countries to develop via industrialization and the provision of cheap human labor, entrenching their economic disadvantage
relative to industrialized countries:[N]ew technologies present a double whammy to low-income countries. First,
they are generally biased towards skills and other capabilities. This bias reduces the comparative advantage of developing countries in traditionally labor-intensive manufacturing (and other) activities, and decreases their gains
from trade. Second, [global value chains] make it harder for low-income countries to use their labor cost advantage to offset their technological disadvantage, by reducing their ability to substitute unskilled labor for other production
inputs. From an economic standpoint, these are two independent shocks thatcompound each other. In other words, each shock increases the costs of theother. The evidence to date, on the employment and trade fronts, is that thedisadvantages may have more than offset the advantages.22
If automation primarily eliminates employment opportunities in developed countries before
developing countries, then the developed countries may be unable to support demand forgoods produced in poorer countries, leading to lower employment there.23
Experts currently disagree about the net effects of AI on human employment over various
timescales.24 Nevertheless, the value of the Windfall Clause does not depend on any particularprediction about the effects of AI on human job prospects.* Instead, it is sufficient motivationthat there is a nontrivial probability that AI will, at some point, have substantial and persistent
negative effects on unemployment.25 The fact that such unemployability would be faultless isof particular note; indeed, people across the political spectrum are generally more supportiveof programs that support faultlessly unemployable individuals.26

B.1.ii. Improving Allocation of Economic Windfall
Pessimistic predictions about the long-run effects of AI on unemployment remain controversial.27 A related but distinct concern is that most of the benefits from AI28 could accrue to asmall number of actors29—particularly, shareholders of “superstar”30 technology firms.31 The
distribution of such benefits under existing policies is unlikely to maximize overall welfare,32
even after taking taxation into account.†
There are several reasons to think that the development of AI could increase concentration of
wealth. First, automation could decrease the share of a company’s income that goes towards
wages, and increase the capital share (the share of income that gets paid to the company’sowners, rather than labor).33 If the capital share increases, then, all else equal, income andwealth inequality will likely increase given that capital ownership is already highly concentrated.
Secondly, the particular nature of AI industries could further drive inequality. AI industries could
have features of a natural global oligopoly,34 meaning that, absent countervailing interventions,they could tend towards having only a single (or a few) firm(s) dominating the industry.35 This
would be a natural extension of more general trends toward oligopoly in digital technology industries36 in which the primary determinants of market structure—such as economies of scaleand network effects due in part to low marginal costs37—“tend to point towards higher industry
concentration ratios . . . .”38
Finally, a unique trait of machine learning (ML) systems is their potential to be “general,” meaning that they can apply insights acquired in one domain to tasks in other domains.‡ Develop-*†‡

In part, this is because the Windfall Clause contains a contingent commitment: major signatory obligations under the Clause vest
only when they achieve windfall profits. See infra § II(A). Thus, if windfall does not obtain, no or minor obligations arise.
This is because taxes primarily benefit citizens of the taxing sovereign and tend to be less efficient at generating social benefits
than the best philanthropies. See infra § V(D)(1).
Research on such “transfer learning” is ongoing.

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ments towards increasing generality of ML technology can thus be expected to raise the valueof data in general, given the ability to develop a set of capabilities from training on relevant
data and then transfer these capabilities to adjacent domains. This increases the incentives
to house adjacent databases and perform adjacent tasks under the same roof.39 In turn, thepotential economies of scope would support the competitive position of larger companies withthe resources to focus on several domains rather than an individual domain.
One must be careful in making precise technological and macroeconomic predictions. Various considerations not explored above could weaken the case for a trend towards increasing
concentration of market power in AI, and indeed, economists are far from consensus on how
the concentration of AI industries will evolve in the future. For example, if machine capabilities
prove permanently difficult to transfer across domains (or more efficient when limited to a single domain),40 AI might give rise to a large number of industry-specific monopolies, without any
trend toward global cross-industry monopoly. Further, trends towards increasing data efficiency of ML algorithms, or policy pressure towards the preservation of privacy via the regulation ofdata, could cap the effect of data on the centralization of market power. Nevertheless, while itis difficult to determine the economic impacts of future technologies with confidence, we must
recognize that radical transformation of global market structure is a serious possibility.
The extreme inequality that could result from this transformation is undesirable for many reasons. The most obvious is the inherent badness of inequality. Many moral philosophers41 anda large portion of the public42 view extreme inequality as inherently objectionable. That is, allelse equal, a more equal society might be better than an unequal one.
Even if inequality is not inherently bad, it might be instrumentally bad. The decreasing marginalutility of money43 means that, all else equal, increasing the poor’s share of income increases
overall utility.* In other words, an additional dollar increases the welfare of a poor person morethan it increases the welfare of a rich person. Thus, inequality-reducing transfers may increase
overall utility.44,45
Dissatisfaction with extreme domestic economic inequality might also lead to political instability.46 If this instability leads to civic unrest, violent conflict, crime, or economic downturn, it
would be well worth avoiding by reducing inequality.
Finally, the concentration of immense wealth could in turn concentrate cultural and politicalpower.47 This could mean that a small number of actors (specifically, AI-firm shareholders) havedisproportionate sway over society, potentially for a long time if a stable global AI-services
monopoly or oligopoly emerges.48 This is arguably contrary to democratic values, according towhich all citizens’ views are supposed to be accorded equal weight.
The Windfall Clause could help address these concerns by committing its signatories to distributing the benefits from AI widely across a number of axes, including geography, nationality,
culture, value systems, and socioeconomic situation.49 Its success in doing so depends in largepart on the design of the Clause’s distribution mechanism, which is covered in more detail in
Section II(B).

B.1.iii. Smoothing the Transition to Advanced AI
The transition to a world with advanced AI might not be smooth and may indeed pose substantial challenges to our ability to build and maintain well-functioning institutions. As articulated by
Bostrom, Dafoe, and Flynn:
The speed and magnitude of change in a machine intelligence revolution
would pose challenges to existing institutions. Under highly turbulent conditions, pre-existing agreements might fray and long-range planning becomes*

4

This is true at least as a first-order matter, though reduction in incentives to earn from redistribution may generate offsetting
drawbacks.

more difficult. This could make it harder to realize the gains from coordinationthat would otherwise be possible—both at the international level and within
nations. At the domestic level, loss could arise from ill-conceived regulation
being rushed through in haste, or well-conceived regulation failing to keep
pace with rapidly changing technological and social circumstances. At theinternational level the risks of maladjustment are possibly even greater, as
there are weaker governance institutions and less cultural cohesion, and it
typically takes years or decades to conceive and implement well-considered
norms, policies, and institutions. The resulting efficiency losses could take theform of temporary reductions in welfare or an increased risk of inferior longterm outcomes.50
A Windfall Clause could reduce this turbulence. To the extent that AI disrupts prevailing socialand economic conditions, distribution of windfall profits would provide all beneficiaries with afinancial buffer. For example, if someone loses her job due to rapid advances in automation,51
the Windfall Clause could provide a sort of “unemployability insurance” that enables her toweather the transition to a new economy.*
This individual stability is desirable in itself, but it could also translate to macroscale stability.
Automatic widespread distribution of gains from advanced AI would eliminate a potential catalyst for popular political pressure for drastic responses to the new economic conditions.52
Individuals who, thanks to windfall dividends, maintain or even see increases in their standardof living, may be less likely to initiate a destabilizing response53 and thus threaten the path
towards a more prosperous society.54
Finally, the Clause could also contribute to macroscale stability by providing a concrete focal
point for renegotiations of the social contract before the advent of advanced AI. It is more productive and stable to have such discussions prior to reaching levels of AI that would trigger theWindfall Clause, when economic circumstances are “calm,” than when some actors are muchricher and others are resentful. Such conditions would likely lead to better, more considereddecisions being made by actors who have the capacity and willingness to consider the broader context beyond their parochial interests.

B.1.iv. General Norm-Setting
By agreeing to be bound by a Windfall Clause, a signatory would send a convincing, costly
signal of the firm’s intention to ethically develop AI. Indeed, a number of influential companies,
officials, and industry groups have already declared such an intent.55 These groups are now
endeavoring to translate their ethical principles into practices and then, in turn, to demonstratethem publicly. Coupled with an international focus on beneficial AI,56 these developments represent an emergent norm in AI development.
In practice, however, some observers have criticized these efforts as “ethics washing”57 or“ethics theater”58 without substantial impact on AI research, development, or deployment.59
Certainly, there is substantial variance in current corporate principles and practices for ethical
AI. Ultimately a process may emerge that sees companies iterate on principles and practices in response to competition and societal debate. As a part of this process, the credible
demonstration of ethical development could reinforce a given company’s position. The Windfall Clause can serve as one such concrete commitment to develop AI ethically. This, in turn,would strengthen the emerging international norm of using AI for the common good, making
further beneficial uses of AI more likely.

*

Of course, non-windfall scenarios may also cause turbulence, including unemployment. The sole benefit of the Clause would bein cases where the Clause is triggered. This might be a small portion of the overall expected turbulence.

5B.2. Firm Motivations
The preceding subsection explains why a Windfall Clause could be valuable to society. However, in order for this value to be realized, it is important to understand why and how AI firms
would willingly agree to the Clause.
The Windfall Clause is a voluntary commitment. Its impact, then, depends on it being compatible with the incentives and interests of those making the commitment. This can be a challenging requirement to meet. For one, for-profit tech companies often have a range of competing incentives and must also meet certain obligations to their shareholders.60 In the following
section, we thus list reasons why the Windfall Clause could be compatible with the interestsof for-profit AI firms, including the opportunity to generate goodwill among consumers andemployees and reducing a firm’s exposure to political risk. We are eager to engage in further
discussion in partnership with these firms in order to understand their perspective and needs.

B.2.i. Generating General Goodwill
Agreeing to a Windfall Clause could generate goodwill for the signatory. Indeed, generating
general goodwill61 is often a justification for corporate social responsibility (CSR) initiatives.*
Some studies have found a positive correlation between CSR efforts and corporate financial
performance62 through a “virtuous cycle”: companies that spend money on corporate social
responsibility benefit from a positive reputation,63 which in turn enables them to spend moreon CSR.64
In this vein, investing in CSR initiatives can equate to sound business strategy, particularly forhighly visible, customer-facing firms whose positive social actions could directly contributeto customer retention and attraction.65 The above suggest that a properly designed Windfall
Clause could improve business outcomes, particularly for large, high-profile AI firms.
The ability for the Clause to generate such goodwill relies on it being robustly designed suchthat stakeholders are sufficiently convinced that the signatory intends to adhere to the Clause’s
principles and obligations. This is a challenging bar to meet and requires thorough analysis
beyond this report.

B.2.ii. Improving Employee Relations
A firm might also adopt a Windfall Clause to attract and retain top talent. Recent researcher
activism over controversial uses of AI technologies at Google and Microsoft, among others,66
suggest that many top AI researchers prefer working for socially responsible firms.67 Adoptinga Windfall Clause could help attract socially conscious tech talent, thus lowering recruitment
costs.68 Indeed, firms with a good reputation for CSR or a prosocial mission are able to pay
much lower wages.69 One study found that firms with a strong reputation for CSR pay 38%
lower wages than firms with a poor reputation.70 Experimental evidence has similarly demonstrated a relationship between corporate philanthropy and increased efforts by workers.71
Given the substantial talent bottleneck and wage premium commanded by machine learning
researchers,72 being seen as socially responsible might prove important or even crucial to remaining competitive in the AI industry. This, too, accords with common justifications for CSR.73

B.2.iii. Reducing Political Risk
A Windfall Clause could position private firms to be viewed more favorably by the public andthe government, thereby reducing risks of adverse regulation74 or activist action. Numerous
commentators have criticized large Silicon Valley firms for a variety of alleged wrongs, including harming their local economy,75 exacerbating income inequality,76 concentrating market
power,77 tax avoidance,78 and abusing users’ personal data.79 A Windfall Clause could build*

6

When the signatory is a corporation, the Windfall Clause can be understood as a CSR initiative.

goodwill among the public, dampening harmful public antagonism for a small (expected)
cost.80 Governments may be less likely to excessively tax or expropriate firms committed toproviding a public good through the Windfall Clause. In fact, they might even feel politicalpressure to avoid interfering with these firms by those who expect to benefit if they succeed.
Notably, mitigation of political and activist risk is a common justification for corporate social
responsibility initiatives.81
A Windfall Clause could be particularly good at reducing international political risk—risk of
expropriation of foreign firms by host governments. It does so by committing the signatory tocompensating the host government and its population fairly in case of windfall profits. Furthermore, nationalizing a firm committed to global profit-sharing would likely draw the ire of other,
non-host nations. Thus, as with other CSR efforts,82 the Windfall Clause could protect firms
from political risk outside of their home country.

7II. DESIGNING THE WINDFALL CLAUSE
A. Defining Contributions: The Windfall Function
The heart of the Windfall Clause is the Windfall Function, which defines signatories’ obligations
under varying profit levels. Although it would be premature to suggest a definitive Windfall
Function here, this section discusses several properties we believe the Function should possess. We describe one possible Windfall Function, primarily for the purpose of illustration, andthen briefly explore the broader space of possibilities.

A.1. Desiderata
The final design of the Windfall Function should be informed by a range of pragmatic considerations and informed by expertise from a number of different domains. To seed the conversation, we outline here a number of desirable features (desiderata) of this Function and describe
one possible Function that fulfills these desiderata for illustrative purposes.
Table 1: Summary of Desiderata

Desideratum

Description

Justification

Transparency

Determining whether a signatory has met their obligations is easy

Avoids costly disputes;
provides public relations
benefits; increases the enforceability of the Clause

Scale-sensitivity

The amount owed under the
Clause depends on the sizeof the global economy when
triggered

Maintains focus on relative
windfallAdequacy

The amount owed under the
Clause is proportionate to
the challenges it seeks toaddress

Respects the importance ofthe policy motivations for
the Clause

Pre-Windfall Commitment

Signatories owe
small-but-nonzero amounts
as they approach windfall
profit levels

Demonstrates signatories’
intent to fulfill their commitment; tests effectiveness ofClauseIncentive Alignment

Signatories should always
have an incentive to earnmore profits

Diminishes incentives forevading Clause obligations
in order to pursue profit,
which in turn mitigates concerns that the Clause could
dampen innovation

CompetitivenessSignatories remain competitive with non-signatory firms

Prevents perverse effectof causing non-signatories
to out-compete beneficent
signatories

First, a signatory’s obligations under the Clause should be transparent. It should be easy fora wide range of stakeholders to understand the nature of and verify compliance with the signatory’s obligations. Such transparency is likely to support both greater accountability andgreater public relations benefits for the signatory.* It is also desirable to avoid costly disputes*

8

Greater public relations benefits would accrue because the signatory is less likely to be accused of making illusory promises.

over whether a given signatory is fulfilling its obligations. Finally, contract terms that are unambiguous are more likely to be enforceable.83
Second, a signatory’s obligations under the Clause should account for changes in economic
conditions (scale-sensitivity). We cannot assume that a commitment that is desirable underpresent economic conditions would also be sensible under all future conditions. One especially important factor to account for is economic growth. An absolute level of profit that would
strike one as a “windfall” if it was earned today might appear rather more modest in the context
of a much larger overall economy. Since the Windfall Clause is partly motivated by low-probability scenarios in which new innovations generate dramatic economic value,84 the possibilityof faster-than-typical growth should be accounted for.
Third, a signatory’s obligations under the Clause should be large enough to significantly mitigate the social concerns that motivate the Clause (adequacy),85 even though efforts from otheractors will ultimately be required to ensure that these concerns are addressed.
Fourth, a signatory’s obligations under the Clause should be small-but-nonzero undernear-windfall profit levels (pre-windfall commitment). Despite potentially making it more difficult to secure signatories, it is desirable for both practical and legal reasons for a signatory totake on minimal obligations well before it earns windfall. Practically, compliance with low-level obligations would normalize a signatory’s compliance with the Clause and provide someassurance that the Clause functions as desired. Legally, this partial performance can serve
as evidence that the signatory intended to be bound by the Clause.86 Thus, low-level performance would make it more difficult for a signatory to later argue that they were not bound by
the Clause. Early compliance would also provide an impetus to the distributors—the entities
responsible for distributing windfall gains87—to establish processes for doing so. The fact that
this would take place when the stakes are low may also be beneficial because the processes
would be more likely to be negotiated on the merits, rather than actor self-interest.
Fifth, a signatory’s obligations under the Clause should not create an incentive for the signatory to maintain low profit levels or engage in other strategic behavior to undermine the Clause(incentive alignment). For example, a signatory should always be better off at higher profit
levels—earning more profits should not result in lower retained profits. If the Clause creates
incentives for signatories to maintain artificially low profit levels, they might do so by, e.g.,
making unnecessary capital expenditures. The Function could also fail this criterion if total obligations jump sharply at some point—this would give firms a clear motive for strategic action
as they approached that point. The more smoothly total obligations increase, the harder it isfor a signatory to decide when to try to evade their Clause obligations.
Sixth, a signatory’s obligations under the Clause should not excessively disadvantage the signatory, relative to its competitors (competitiveness). A signatory that has signed the Clauseshould also not be forced to reduce its level of reinvestment to unacceptably low levels after
their obligations under the Clause have been triggered. Such a reduction may have negative
implications both for the long-term position of the signatory and for economic growth more
broadly, given that the signatory would at this point be responsible for a significant portion of
the world’s economic output.88

A.2. An Illustrative Windfall Function
Given these desiderata, we sketch one possible form the Windfall Function below. This sketchshould not be taken as a firm proposal. Rather, we intend it to serve as something of a “proof ofconcept” and as a baseline for more fully developed proposals to build on. It may be the casethat an ideal Windfall Function would differ greatly along several dimensions.

9In this illustrative Windfall Function, a signatory’s obligations under the Clause for a given year
depend on its proportional profits: its annual consolidated* profits† as a portion of gross world
product (GWP, or global GDP) for that year.‡ Proportional profits are divided into four brackets,
each associated with a different (and progressively higher) marginal clause obligation, as a
portion of marginal profits. Marginal profits are calculated as the difference between the signatory’s profit as a portion of GWP minus the lower bound of bracket in which the signatory
falls. These brackets are then used to calculate the total financial obligations under the Clause:
Table 2: Illustrative Marginal Clause Obligations

BracketMarginal Clause Obligation

0%–0.1%0%0.1%–1%1%

1%–10%

20%

10%–100%

50%(Profits as a Percent of GWP)(Portion of Marginal Profits)

As one sample calculation, a signatory whose profits were equivalent to 2% of GWP would be
obliged to give 0% for the first 0.1% of proportional profits, 1% for the next 0.9%, and 20% on theremaining 1%. This amounts to approximately 10% of its total profits.§ In general, while marginal
obligations increase in steps as per the bracket structure, total obligations increase smoothly.
For perspective on these brackets, the state-owned enterprise Saudi Aramco is the only existing firm whose estimated profits place it in the second bracket or above.89 The most profitable
technology company and the second most profitable firm in 2018, Apple, posted profits equal
to approximately 0.06% of GWP, placing it in the first bracket with a 0% Clause obligation.90 We
have found no historical examples of firms whose profits would have placed them in the third
bracket, which we associate with windfall profits.
For further context, note that the marginal clause obligation associated with the second bracket roughly equals the portion of total profits that a typical company in the Fortune 500 alreadydonates to philanthropic causes.91 The marginal clause obligation associated with the third
bracket is slightly lower than both the American corporate tax rate and the average corporate
tax rate globally.92 In essence, once a firm achieves windfall profits, its giving obligations gradually rise until they are equivalent to a second layer of taxation.

A.3. Evaluating the Illustrative Windfall Function
The illustrative Windfall Function just described is unlikely to be optimal. However, we cansee that it at least roughly fulfills the key desiderata. It therefore suggests that the project ofdesigning an acceptable Windfall Function is likely to be tractable.
First, the Function is easily comprehensible (transparency). It is simple to state and can beunderstood without any advanced knowledge of mathematics, economics, or law. The bracket
system should be broadly familiar due to the common use of tax brackets. The Function is also

*

†
‡
§

10

Ideally, corporate signatories would be required to report earnings on a consolidated statement once serious obligations vest.
This makes determination of compliance and obligations easier. It would also prevent firms from evading Clause obligations byassigning profits to affiliated corporations (e.g., subsidiaries or siblings) that are nominally unbound. One can also prevent thissecond problem by a contractual provision stating that the Clause applies to any affiliates of the signatory. For further discussionof this issue, see infra § V(A)(2).
For firms that are not for-profit companies, the numerator would have to be in different units.
Proportional profits would be calculated on the basis of the firm’s financial statements and the GWP estimates of a designatedbody such as the World Bank.
Calculated as: (0 * 0.1) + (0.01 * 0.9) + (0.2 * 1) = 0.209% of GWP, or (0.209 / 2) ≈ 10% of its total profits.

fairly precise. Of course, one could argue about what the true GWP is.93 However, it seems to
us that the relevant ambiguities can be reduced enough to make the risk of costly disputes
quite low.94 The question of evasion is certainly more complex. Nonetheless, as Section V.A.2.
will discuss in depth, it does also appear tractable to put in place sufficiently powerful safeguards. Several strategies commonly employed to evade taxes also do not appear to be directly applicable to this case.95
Second, the Function accounts for changes in economic conditions (scale-sensitivity). Specifically, it accounts for the possibility of significant economic growth by defining a signatory’s
obligations in reference to GWP.
Third, the Function imposes significant obligations on windfall-earning firms and is therefore
likely to generate revenues appropriate to the task at hand (adequacy). It is likely that 20% or
50% marginal obligations will provide significant funds for humanitarian purposes if the Windfall Clause is triggered. For a simplified example, suppose that a signatory earns a $5 trillion(in 2010 dollars) profit* from AI in 2060.96 Based on OECD estimates, the GWP in 2060 will be$268 trillion (again in 2010 dollars).97 Thus, the signatory’s profits would be 1.8% of GWP.† According to this Function, they would be obligated to give
• 0% of its first $268 billion in profits, for a subtotal of $0;• 1% of its next $2.412 trillion in profits, for a subtotal of $24.12 billion; and• 20% of its next $2.32 trillion in profits, for a subtotal of $464 billion
for a grand total of $488.12 billion. This is a substantial amount of money that could accomplish
a lot of good in the world.98
Fourth, the Function assigns signatories small-but-nonzero obligations under near-windfall
profit levels (pre-windfall commitment). As discussed, the 1% marginal rate of giving for profits
between 0.1% and 1% of GWP is compatible with typical rates of corporate giving.99 Only once
profits rise above 1% of GWP—suggesting a “windfall”—does the marginal rate of giving become extraordinary. While no firm is currently sufficiently profitable to possess any obligations
under the Clause, it is unlikely that profits would ever jump quickly from the first bracket to thethird. This ensures that the signatory would have significant experience managing small obligations under the Clause before its obligations grow large.
Fifth, because total obligations grow smoothly, there should at no point be a sudden increasein the incentives for a signatory to maintain artificially low profits (incentive alignment). While
there is indeed a significant jump in marginal rates at 1% of GWP, the jump is in marginal rates,
so total obligations just above 1% are not starkly different than those below it.
Finally, the Function implies obligations that are unlikely to be excessively disadvantageous(competitiveness). Once a signatory’s profits cross the perhaps historically unprecedented
threshold of 1% of GWP, its pre-tax giving obligations begin to rise to nearly match a typical
corporate tax rate.100 This is obviously a very significant obligation. However, the obligation
also does not seem to be excessively disadvantageous given that any signatory whose profits
are consistently greater than 1% of GWP is an extremely successful, and extremely competitive,
firm. In general, scaling obligations with the signatory’s profits as a portion of GWP ensuresthat only sufficiently competitive firms will hold significant obligations. Concerns about adverse
effects of the Clause on the rate of investment remain valid. Nonetheless, we can also assume
that any signatory whose profits exceed 1% of GWP would still be in a position to make investments that are very large in an absolute sense. Section V discusses concerns about the rateof investment more fully.101*†

This expected profit level is picked only for ease of illustration; we make no claims as to its plausibility over other possible
expected profit levels.
Of course, GWP could be higher if the above GWP predictions do not account for the advent of advanced AI by 2060. For theease of illustration, we will nevertheless assume that these GWP forecasts are accurate even when conditioned on the advent ofadvanced AI.

11

It is difficult to imagine that any signatory’s profits will ever cross the threshold of 10% of GWP.
Even if we assume an unusually high profit margin of 20%, this scenario appears to be one
where at least half of all revenue generated across the world is accruing to a single firm.
Nonetheless, if we choose to consider such a scenario, it also seems plausible that a marginal
rate of giving as high as 50% would be warranted and not excessively disadvantageous to thesignatory since there would be little room for competition.

A.4. Directions for Further Investigation
There are many possible versions of the Windfall Function. Here we discuss several possible
variations in less detail, to seed further investigations in the future.
One way to vary the Function is to alter the thresholds and marginal giving obligations associated with the various brackets. The number of brackets might also be increased or decreased.
Alternatively, brackets might not be used at all. The marginal giving rate associated with the
Function could instead increase smoothly, though this might be less scrutable.
A second way to vary the Function is to base obligations on a measure other than proportional
profits. Absolute profits might instead be used, although, as noted above, this would not directly account for economic growth. A Windfall Function based on market capitalization appears
especially promising.*
A third way to vary the Function is to adjust obligations on the basis of a signatory’s financial
position at the point where it agrees to the Clause. For instance, it may be appropriate fora firm with a higher probability of eventually achieving windfall profits to commit to smaller
conditional obligations. The justification here is that the expected cost of agreeing to a given
conditional obligation is smaller the less likely it is that the conditional obligation will ultimately
need to be fulfilled.
A fourth way to vary the Function is to define obligations in terms of shares of stock, rather thandollar amounts. For instance, a firm may be obligated to create a certain number of shares ofstock to be held by a nonprofit entity if the firm’s profits or market capitalization rise above acertain level. This would result in an effective transfer of future profits from other shareholders
to the nonprofit entity, due to stock dilution. One way to implement this model would be to
grant contingent convertible (CoCo) bonds to the relevant nonprofit entity, with the stipulationthat the bonds can be converted into shares of stock only when the firm achieves windfall
profits.102,103
A fifth way to vary the Function is to associate obligations with strict caps on profit. For instance, a cap might be placed on the total quantity of profit that can be paid out as dividends
associated with an individual share of stock. Once the cap is reached, the profit that would
be paid out as a dividend to the relevant shareholder is instead given as a Windfall Clausepayment. This model is similar to the “capped-profit” model adopted by OpenAI LP, which prevents first-round investors from earning more than one hundred times their initial investment.104
One potential benefit of the model is that it more directly addresses concerns about individual
inequality in cases where unexpected windfall profits would primarily accrue to a small number of fortunate shareholders. However, this model also introduces a number of additional
practical and legal complexities. For instance, the model would seemingly result in a class ofshareholders who are incapable of receiving further dividends.
A final way to vary the Function would be to account for the effects of taxation on the signatory.
We do not propose such accommodation here due to the legal and economic complexity ofthe topic. However, such accommodation might be necessary to minimize undesirable distortions.

*

12Market capitalization may be desirable since it is harder to manipulate downwards without upsetting shareholders. However,tying the Clause to market cap could oblige a firm to pay even when it posts no profits.

Ultimately, there is a need for significant further work exploring the space of possible Windfall
Functions and evaluating particular options within it. It is important that this work involves the
input of a wide range of stakeholders and experts in relevant disciplines, such as corporate
finance and optimal tax theory.

B. Distributing the Windfall
The Windfall Clause is only effective to the extent that the windfall is distributed to fulfill the
Clause’s aims.105 We expect that designing and implementing distribution systems for the
Clause would take substantial work and accordingly will not offer a full blueprint for distribution here. Instead, we here briefly list some significant considerations for such a system and in
Appendix II offer some outlines of potential windfall distribution systems.
The considerations we describe below are:
1. Effectiveness2. Accountability
3. Legitimacy
4. Firm Buy-In
These considerations may sometimes pull in different directions. Thus, a distribution system
will sometimes need to trade off these desiderata against each other. Nevertheless, we are
hopeful that subsequent work will yield distribution plans that score well across all these dimensions. As with the Windfall Function, conversations with a wide variety of stakeholders andexperts are surely warranted here.

B.1. EffectivenessThe distribution scheme should be effective at achieving the desired goals. The broadest
definition of this would be that the distribution system is aimed at maximizing expected good
produced per dollar received.106 Of course, judgments about what is “good” are philosophically and politically contentious, and a Windfall Clause will have to balance competing ethicalframeworks.
For many measures of the good, however, charitable opportunities vary,107 and the opportunity
costs of failing to maximize expected good produced per dollar received are high.108 Failing to
use windfall profits effectively would both frustrate the Clause’s main purpose and squander
an amazing opportunity to leverage the fruits of AI for the good of humanity.
Another type of effectiveness would aim not at maximizing the good generally, but specificallyat minimizing any harms from advanced AI, such as unemployment and inequality.109
Finally, the distribution systems will need a geographical scope. Given that many of the problems posed by AI are global in nature, a global distribution system seems like a sensible default assumption. However, political realities might hinder this. Allocation within that scope also
needs to be defined. For example, in a global scheme, do all states get equal shares of windfall? Should windfall be allocated per capita? Should poorer states get more or quicker aid?
At this stage, these goals are under-defined and open to debate. As such, throughout this report we hope that readers will consider them a starting point for further discussion on what an
appropriate set of goals could and should be for a windfall distribution scheme.

B.2. Accountability
Part of the motivation of the Windfall Clause is to moderate powerful actors’ influence over
how windfall profits are distributed.110 Thus, an effective distribution system would containmechanisms to prevent distributions being used in a way that is overly parochial. An obligation
to use donations effectively would hopefully help, but further measures are warranted. Options
could include:11113• Transparency measures, such as written rationales for key decisions112 and reporting
obligations to third parties;• Compliance measures like the “four-eyes principle” (that “transaction[s] . . . must be
approved by at least two people”)113 or rewarding whistleblowers for exposing mismanagement;114• Enforceable fiduciary duties imposed on decision-makers115 such that they are legallyobligated to act for the benefit of others rather than their own self-interest;• Incentive structures that reward effective use of funds;116 or• External review and enforcement by public or private117 entities.

B.3. Legitimacy
Since the Clause is intended to benefit all people, all people should have some voice in ensuring their needs are heard and addressed. Aggregating preferences across so many people would be a serious challenge, but a worthwhile one. Possible mechanisms for doing thisinclude:• Allowing popular election of some or all windfall decision-makers;• Allowing international or intergovernmental organizations to influence windfall spending;• Giving some or all individuals standing to legally challenge the management of thewindfall;* or• Using existing and new consensus mechanisms to guide windfall spending.118

B.4. Firm Buy-in
The Windfall Clause depends on firms’ buy-in and, to some extent, cooperation. Distribution
mechanisms that adequately consider and protect firms’ interests—both pre- and post-windfall—are therefore more attractive and effective. Ways of promoting firms’ interests withoutcompromising the above values could include:• Publicizing and celebrating firms’ commitments to the Clause; or• Allowing firms to have some influence over how the windfall is spent.
A good distribution system would combine these and other desirable characteristics to advance the Windfall Clause’s goals. Designing such a system would undoubtedly consume asignificant portion of the negotiations before and after implementation of the Windfall Clause.
We hope that the general public, civil society, and AI firms will engage in productive deliberation on the many important considerations in pursuing this part of the greater Windfall Clauseproject.

*

14This would be the flipside of giving windfall decision-makers fiduciary obligations. See supra § II(B)(2).

III. LEGAL PERMISSIBILITY
This section demonstrates that the Windfall Clause is permissible as a matter of corporate law.
Although some firms may not be for-profit corporations, we focus on corporations in particulargiven their leading role in the current AI ecosystem and particular restraints on their ability toengage in philanthropy. In Appendix I, we also explain why the Clause could be binding as amatter of contract law and difficult to challenge long after signing as a matter of civil procedure.
In this section, we pay the most attention to the corporate law of the state of Delaware, sincea large plurality of major American corporations are incorporated there. We also analyze thelegal permissibility of the Windfall Clause in the People’s Republic of China,119,120 though westress that none of the authors are experts on Chinese law. Future analysis will hopefully clarify
the permissibility of the Clause in these and other relevant jurisdictions.
Our key argument is that, notwithstanding corporate executives’ obligations to their shareholders, the Windfall Clause is permissible as a matter of corporate law.

A. Permissibility in the US
A.1. Delaware Law of Corporate Donations
Delaware corporations are generally empowered to make charitable donations.* However, fiduciary duties still require for-profit corporate management to exercise that power in the bestinterests of the corporation.
“Corporate expenditures today are judged under the business judgment rule, a standard that
accords substantial deference to management’s judgment. The fact that a perceived benefit
is intangible, noneconomic, or uncertain will not invalidate a corporate expenditure.”121 Thus,“courts [have] upheld discretionary corporate giving on the theory that donating to charity
benefits the corporation,”122 such as through generating goodwill.
Beyond the requirements of the traditional business judgment rule (BJR),123 Delaware courts
have apparently imposed an additional restriction on corporate donations: the gifts must be“reasonable.”124 To determine reasonableness, Delaware courts explicitly consider the charitable deduction allowance in the Internal Revenue Code (I.R.C.) a “helpful guide.”125
I.R.C. § 170 governs the charitable deduction. The general rule is: “[t]here shall be allowed
as a deduction any charitable contribution . . . payment of which is made within the taxable
year.”126 For corporate taxpayers, such deductions cannot exceed 10% of the taxpayer’s annual
taxable income.127 In the only Delaware case on this point, Sullivan v. Hammer,128 the Delaware
Chancery Court, in an unpublished opinion, approved a proposed shareholder class action
settlement that included corporate donations to a museum. Parties disagreed about whether
to value the gift at 7%129 or between 15% and 17%130 of the defendant-corporation’s net income.
The Chancery Court dodged the question of the proper evaluation of the gift but neverthelessupheld the gift as “within the range of reasonableness.”131 The Supreme Court of Delaware
upheld that decision on appeal, also without definitively evaluating the gift.132
Despite early hostility to corporate philanthropy,133 in the handful of modern challenges thereto134 no American court has invalidated a corporation’s philanthropic act. However, in othercontexts Delaware courts have found that a corporate manager who is employed by a nonprofit institution lacks independence from a major donor to that institution.135 This suggests that a
corporate manager who made a corporate donation to a nonprofit that employed that manag-*

Every Delaware corporation has the power to “[m]ake donations for the public welfare or for charitable, scientific or educational
purposes, and in time of war or other national emergency in aid thereof . . . .” Del. Code tit. 8, § 122(9) [hereinafter DGCL]. Note,however, that the corporate management can exercise the powers of a corporation in ways that breach their fiduciary duties toshareholders. This subsection explains the relevant duties. The next subsection explains why the Windfall Clause, as a corporate
donation, is not a breach of those duties.

15

er would not receive the protection of the BJR because such a transaction would not be disinterested. However, courts have not found that managers benefit from donations to charities
on whose board the manager sits.136 Finally, despite influential statements to the contrary,137
courts apparently have no qualms with managers directing donations to their “pet charities.”138

A.2. Delaware Law as Applied to the Windfall ClauseAt first glance, a Windfall Clause might seem vulnerable to challenge on the grounds thatit could, in the case where a firm exceeds the threshold, commit a corporation to donate inexcess of the allowable I.R.C. deduction. However, this argument commits the mistake of evaluating the Clause in hindsight, only in the event that it is triggered. The proper approach is toevaluate the expected value of the Clause at the time of commitment.
The BJR maximizes shareholder wealth by insulating directors from second-guessing bycourts: in the absence of BJR protections, directors would prefer low-risk investments, leading
to suboptimal expected returns.139 A related justification for BJR protection is the “risk that
hindsight bias will color our assessments of what an acceptably good [decision] process would
have been or would have produced.”140
Thus, the proper way to evaluate a Windfall Clause, as with any corporate decision, is by its
expected value.141 Even though the cost of a Windfall Clause might exceed Delaware donation
guidelines if triggered, the relevant inquiry is the expected cost of the Clause: the cost if triggered multiplied by the probability of a triggering event.* Furthermore, since the cost of theWindfall Clause would be borne, if at all, in the future, its expected costs should be temporally
discounted to yield a present expected cost. Due to both the improbability of any given firm
achieving windfall profits and the exponential discounting of any profits they did earn, the grossexpected present cost of the Windfall Clause would probably be very low for any signatory.142
For the reasons stated above,143 the benefits of the Clause could be significant. This forms thebasis for the case that corporate directors would not be grossly negligent in believing that theClause is in the corporation’s best interests.144 The Clause should therefore survive a challenge
under the BJR.145
A useful analogy can be drawn between the Windfall Clause and stock option compensation,
which is incontrovertibly permissible. Like the Windfall Clause, stock option payments have apermissibly low present expected value, but can have a much higher value once exercised.† For
example, in 2005, Facebook issued a large block of stock options to its CEO Mark Zuckerberg.146
Zuckerberg exercised these options in 2012147 and 2013,148 for a net pre-tax value of over $5.3 billion.149 If evaluated ex post (i.e., after Zuckerberg exercised the options), the 2005 stock options
were wildly excessive CEO compensation for a company that earlier that year was evaluated atonly $100 million.150 However, when one evaluates the stock options ex ante—as is proper—then
they were likely appropriate.151 Analogously, the Windfall Clause might appear excessive as acorporate donation if evaluated ex post, but it is clearly reasonable if evaluated ex ante.
Of course, legal conclusions are always subject to uncertainty due to the possibility of departure from precedent. Such departure might be more likely than usual with as novel a contract
as the Windfall Clause. Still, assuming the state of the law is stable and applied in this case, theWindfall Clause should survive legal scrutiny.

B. Chinese Corporate Philanthropy Law‡
China houses a substantial number of important AI firms. The parallel question of whether theWindfall Clause would hold under Chinese law thus warrants investigation.

*
†
‡

16

More precisely, the sum of the products of the values from all possible windfall contingencies and their respective probabilities.
Indeed, since there is no upper bound on stock price, stock options could have arbitrarily high value ex post.
None of this Report’s authors are experts in Chinese law, so this analysis should be considered preliminary and cursory. If thisproject advances further, we anticipate needing to engage much more substantially with Chinese law.

The corporate law of the People’s Republic of China (hereinafter, “China”) is fundamentallydifferent from Delaware law in that it instructs corporations to “observe social morality andbusiness ethics, act in good faith, accept supervision by the government and the public, andbear social responsibilities.”152 Thus, in the past decade China’s national and subnational governments have actively promoted CSR, including corporate philanthropy initiatives.
China’s current CSR regime originates from the mid-2000s:
In 2005, President Hu Jintao articulated China’s new policy vision of building
a “harmonious society,” which was adopted as a policy mandate by the Central Committee of the Communist Party in 2006. This policy directive included
a mandate for all governments to “strengthen CSR,” paving the way for governments at the central and subnational level to move into this policy space.
Beginning in 2006, President Hu Jintao and other leaders within the Party
and the National People’s Congress began to emphasize that businesses operating in China must not place profit seeking above morality and the broadersocial welfare, but rather should adopt responsible and sustainable businesspractices.153
This policy culminated in revisions to China’s Company Law,154 including the incorporation of
Article 5, which reads: “When engaging in business activities, a company shall abide by laws
and administrative regulations, observe social morality and business ethics, act in good faith,
accept supervision by the government and the public, and bear social responsibilities.”155
The CSR elements of Article 5 are aspirational, not enforceable.156 Nevertheless, “[t]he provision encourages firms to consider the social wellbeing of all the constituencies. According tothis rule, companies would adopt government and public interest as its guiding value, which isin line with the overall desire to achieve a more harmonious society.”157“Governments at all levels have been active in raising awareness of CSR principles.”158 However, the primary focus has been encouraging businesses to meet and exceed laws159—especially with environmental and sustainability regulations160—not philanthropy. Nevertheless,
China’s CSR regime does include encouragement of corporate philanthropy. At the national
level, China’s new Charity Law161 provides for tax deductions on corporate donations.162 Some
subnational governments reward corporate philanthropists with “extra points towards local
CSR certification.”163 “Others directly solicit corporate contributions to development or charitable projects sponsored by state-approved organizations.”164
To summarize, unlike the Delaware corporate law system, Chinese corporate law actively encourages some degree of corporate philanthropy. This provides a promising starting point for
further legal analysis on the nuances of corporate law in China, and how they interact with
policy proposals like the Windfall Clause.

17IV. HISTORICAL PRECEDENTS
While the Windfall Clause, if triggered,* would involve redistributing an unprecedented magnitude of funds, the Clause represents a continuation of innovations in philanthropy. Existing
CSR initiatives already match the scale of the Windfall Clause in present expected cost, scope,and breadth. National policies are constructed to transfer vast sums to support the welfareof future generations based on realized windfalls. Personal philanthropy—in both theory andpractice—often uses a threshold model. The Windfall Clause draws inspiration from all three.
Recognition of these precedents is helpful for understanding the viability of such a plan. Although ambitious, therefore, the Windfall Clause is not as unprecedented as it may first appear.

A. Precedents from CSR Practices
A.1. Overall Cost
If triggered, the Windfall Clause could be the largest CSR program in history. Yet, the likelihoodof any particular project triggering its commitments under the Clause is both very low andlikely far off in the future; thus, its expected present cost resembles philanthropic efforts ofcorporations today.
As a very simplified illustration, recall the example from supra § II(A)(3) wherein a signatory
earns $5 trillion (in 2010 dollars) profit from AI in 2060 when the GWP is $268 trillion (again in2010 dollars). Under the proposed Windfall Function supra § II(A)(2), such a corporation would
be obligated to give $488.12 billion (again in 2010 dollars).165
Suppose, optimistically, that a firm in 2019 had a 1% chance of earning such profits by 2060
(and otherwise a 99% chance of earning profits that would not trigger the Windfall Clause atall). Further suppose, for extreme simplicity, that if the firm achieves windfall profits, under the
Clause it will continue to owe $488.12 billion per year forever.†If we discount annually at 10% (the approximate cost of capital for internet software firms),166 thepresent cost of such a commitment, if realized, is equal to:Σ∞$488.12 * 109 * (1 – 0.1)tt=(2060–2019)
This series converges to $64.934 billion (in 2010 dollars). If we further discount that amountby 99% (to account for the probability of not achieving windfall profits and therefore bearing
no costs under the Clause), we arrive at an expected present cost of $649.34 million (in 2010
dollars).
To compare this to past corporate philanthropy, 2015’s largest donor was Gilead Scienceswith $446.7 million.167 In 2010 dollars, this would be $414.17 million.168 Note that this historicalcomparison only includes outright cash donations, not the (opportunity) cost of other forms of
CSR.169 Thus, even under very optimistic assumptions about a signatory’s prospects for achieving and maintaining windfall-generating AI, the expected present costs to a signatory are only
60% greater than leading corporate philanthropy efforts today.

*
†

18

Some Windfall Functions might be continuous, see supra § II(A)(4), so there is no single point at which the Windfall Clause is“triggered.” For the ease of discussion, we can say that a Windfall Clause using such a function is triggered when the signatory’s
marginal obligation exceeds 10%.
In reality, of course, this would depend on how GWP rises relative to the firm’s profits. The projections and calculations for sucha scenario are far too speculative and beyond the authors’ capacity to estimate here. Thus, we use the very simple assumptionof perpetual and constant obligations to avoid this speculation. We hope that future work will allow for better estimates of the
expected costs of the Windfall Clause.

A.2. Other Factors
The Windfall Clause would be a global effort. Firms have long engaged in global CSR, especially in areas touched by their supply chains.170 The Responsible Business Alliance, for example,
is a group of over 140 companies—including leading computer hardware manufacturers—that
administers rules on issues in supply chain responsibility.171
There is precedent for a firm distributing massive, unexpected profits to support social welfare. During the development of the atomic bomb, the Belgian Congo-based Union Minière
du Haut-Katanga reaped huge profits from uranium mining172—so much so that they became apolitical liability.173 Concern over criticism and nationalization efforts led the company in 1946
to offer the colonial government a check for the equivalent of between 22 to 109 million 2015
dollars174 to support social welfare in the colony.175 (The colonial governor declined because he
did not want to draw attention to the sheer size of the company’s profits.)176
There is also precedent for the multi-firm nature of the Windfall Clause. One historical example
is the informal “5 percent club” in the 1960s and ‘70s, whose members were leading US firmsthat donated 5% of pre-tax earnings to charities.177 Although collaboration among competitors
can sometimes trigger antitrust scrutiny, the Federal Trade Commission has acknowledgedthat collaborative CSR efforts can add social value without harming competition.178
Increasingly, leading firms have entered into social responsibility efforts with civil society organizations, not simply industry consortia. Within this institutional form, a civil society organization
administers rules for prosocial behaviors such as sustainable forestry, fair pay, and charitable
donations. Compliant firms receive exclusive benefits, often through consumer or employee
demand for a certification mark on products.179 The Forest Stewardship Council,180 Rainforest
Alliance,181 Fair Trade,182 and (Red)183 are all well-known examples of such partnerships. The
structure of the Windfall Clause follows this lineage of civil society initiatives to promote CSR.
Corporate social responsibility efforts are also regularly contingent on some threshold, albeit
one lower than that of the Windfall Clause. Commonly, this threshold is whether the firm turns
a profit; if so, then the firm will pursue CSR efforts. This has sometimes become a central focusof the business. Newman’s Own, Inc. is a well-known example that markets its food products
based on its charitable efforts. All profits from the corporation are passed to its sole owner, theNewman’s Own Foundation, which supports various charitable causes.184
Another model does not focus the business solely on charity, but rather passes some profits to charity. Industrial foundations—nonprofit organizations that own a controlling interest in
a for-profit business—are one such form.185 Although there is no legal requirement for suchfoundations to serve charitable purposes, profit-dependent dividend revenue from foundation-owned stock commonly funds charitable giving.186 When Google filed for its IPO in 2004,
they announced their intention to “contribute significant resources to the [Google F]oundation,
including employee time and approximately 1% of Google’s equity and profits in some form.”187
They followed through on this commitment in 2005.188
Finally, there is precedent specifically among AI firms. One notable AI firm, OpenAI, recently
restructured from a nonprofit to a “capped-profit” company.189 They state that this is designed
to allow them to raise the capital necessary to build powerful AI systems while also maintaining their philanthropic mission.190 The Windfall Clause follows from these precedents of profit-threshold contingent charitable commitments.

B. Precedents from Public Windfall Governance
A number of public policy precedents address the unique challenges posed by windfall profits
in other industries.
Wealthy countries use sovereign wealth funds to manage their windfalls for the benefit of theirpresent and future citizens. Governments endow these funds with profits from natural resources or currency reserves from international trade surpluses. Their scale is massive, surpassing
19

that of even the Windfall Clause: sovereign wealth fund assets around the world amount towell over $8 trillion, with the Norwegian Government Pension Fund Global alone amounting
to over $1 trillion.191 These funds often aim to benefit future generations through either wealthpreservation and transfer (in developed countries) or development (in developing countries).192
The Norwegian fund, for instance, states that it acts “as a financial reserve and as a long-termsavings plan so that both current and future generations get to benefit from our [current] oil
wealth.”193 Although there are key differences between sovereign wealth funds and the Windfall Clause*—the scope and scale of distribution for one—they both serve to improve the economic allocation of windfall resources and do so at a massive scale.194
While at a much smaller scale than the proposed Windfall Clause, local American governments
sometimes use a “windfall clause” when subsidizing private sports arena construction. Contracts between the subsidizing government and the franchise sometimes contain a clause that
ensures public benefit if a windfall sale of the “home team” occurs, as compensation for the
public subsidization.195 Other existing policies subject especially profitable companies196 andnatural monopolies197 to stricter governmental control for the public good.
Thus, the Windfall Clause has precedents in existing public policies for dealing with various
previous windfalls.

C. Precedents from Personal Philanthropy
Many expect very wealthy individuals to share much of their financial windfall, with those
who hold onto most of their wealth facing persistent criticism.198 Bill and Melinda Gates andtheir foundation epitomize—and indeed helped shape—this norm. They and Warren Buffett
launched the Giving Pledge: a nonbinding commitment by billionaires to donate more than halfof their wealth.199 A similar project—the Founders Pledge—binds technology entrepreneurs togive some percentage of their exit proceeds to charity upon selling their shares.200 The Windfall Clause applies this expectation of wealthy people to especially profitable firms.201
In practice, studies show that ex ante commitments encourage greater charitable giving due
to loss aversion (among other reasons).202 Although the relevant psychological studies may
not apply to firms as such, they can apply to decision-makers within firms.203 Thus, the ex ante
nature of the Clause makes philanthropic actions more likely to materialize, compared to philanthropic acts after the acquisition of a windfall.
In conclusion, though the Windfall Clause is a unique policy proposal, its various aspects draw
heavily from existing corporate, policy, and philanthropic practices.

*20

Notably, in sovereign wealth funds, the payments into the fund may occur over time and do not follow a threshold model. Suchfunds are initiatives of national governments, not private industry.

V. OBJECTIONS, ALTERNATIVES, AND
LIMITATIONSIn this section, we identify—and where appropriate, respond to—possible objections and limitations to the Windfall Clause as proposed, and analyze alternative mechanisms204 for achieving the Clause’s aims. The points that we address here are those we consider most worthy ofcareful attention; we certainly invite further discussion on these points, as well as those notraised in this section.
To summarize, we do not claim that the Windfall Clause is a perfect mechanism, let alone theonly mechanism of its kind that should be pursued. Indeed, we are not very confident that, allthings considered, it ought to be adopted. However, we do believe that the Clause is promising enough to warrant further investigation, notwithstanding even its greatest shortcomings.
To the extent that the Windfall Clause needs to be revised, or not pursued, because of its
shortcomings, we believe that the public conversation needed to recognize this will be valuable itself. We look forward to discussing and collaborating with others in the construction of
the Windfall Clause, and other socially beneficial legal commitments.

A. Reasons Why the Windfall Clause Might Not Work
A.1. “The Windfall Clause will never be triggered.”Some might doubt that the Clause will ever be triggered—i.e., they may be skeptical that any
firm will attain profits sufficient to trigger nontrivial obligations under the Clause. This is not somuch a reason why the Clause may not work—indeed, by design, the Clause is only intended
to trigger under certain circumstances. Rather, this could be a reason for questioning the relevance of the Windfall Clause as a tool for addressing the negative impacts of AI development.
To be sure, the Windfall Function we defined in Section II(A) only results in significant obligations under the Clause if profit reaches very high, currently difficult-to-imagine amounts.
However, we view these profit levels as possible in the future given the unprecedentedlytransformative nature of AI. We also hope that further refinements to the Windfall Function canyield obligations that are neither too likely nor too unlikely; the Windfall Function offered above
is a first attempt, not the commitment-ready form.
Further, it is also worth noting that the Clause is not intended to be the sole policy mechanism
to address potentially negative outcomes resulting from an AI-driven economy. Rather, it isbest suited for the particular scenario in which windfall profits are achieved. Other measures
are likely desirable to address other (i.e., non-windfall) issues which may arise in scenarios ofAI development which do not reach levels of windfall profits, but nevertheless warrant attention and intervention. We certainly hope that such mechanisms are explored as complements
to the Windfall Clause.

A.2. “Firms will find a way to circumvent their commitments under the
Clause.”One might worry that, as the Clause begins to impose substantial obligations, firms will seek
to exploit some “loophole.”205 This is a reasonable concern; indeed, as the obligations of theClause increase there could be trillions of dollars on the line, creating strong incentives forfirms to avoid their obligations. Great care should be taken to design a clause and supporting
mechanisms that increase the likelihood that commitments cannot be circumvented. Here, we
address specific ways firms might attempt to sidestep their commitments, and suggestions for
how we may mitigate these risks.**

As with other legal analysis in this report, the focus here is on American law. If other law is applicable, additional legal analysis
might be warranted.

21

A.2.i. “Firms will evade the Clause by nominally assigning profits to subsidiary,parent, or sibling corporations.”
The worry here is that signatories will structure their earnings in such a way that the signatory
itself technically does not earn windfall profits, but its subsidiary, parent, or sibling corporation(which did not sign the Clause) does.206 Such a move could be analogous to the “corporate inversion” tax avoidance strategy that many American corporations use.207 Thus, the worry goes,shareholders of the signatory would still benefit from the windfall (since the windfall-earning
corporation remains under their control) without incurring obligations under the Clause.
We think that the Clause can mitigate much of this risk. First, the Clause could be designed tobind the parent company and stipulate that it applies not only to the signatory proper, but also
to the signatory’s subsidiaries.208 Thus, any reallocation of profits to or between subsidiaries
would have no effect on windfall obligations.* Second, majority-owned subsidiaries’ earnings
should be reflected in the parent corporation’s income statement,209 so the increase in the subsidiary’s profits from such a transfer would count towards the parent’s income for accounting
purposes.† Finally, such actions by a corporation could constitute a number of legal infractions,such as fraudulent conveyance210 or breach of the duty to perform contracts in good faith.211

A.2.ii. “Firms will evade the Clause by paying out profits in dividends.”
The worry here is that a corporation would distribute windfall to shareholders before meeting
its obligations under the Clause. If it were to do so, it would be breaking the law. Dividends
must be paid out of a corporation’s surplus,212,213 which should account for liabilities such as alegally binding Windfall Clause obligation.214 This concern would, however, stand if the Windfall
Clause is a non-legally binding commitment at the point at which the obligations vest.

A.2.iii. “Firms will sell windfall-generating AI assets to a firm that is not bound by
the Clause.”
One might also worry that a firm will sell its windfall-generating AI assets to another technology firm that has not signed the Clause, thereby effectively shifting the windfall from a boundfirm to an unbound one. However, unless the buyer was offering the firm more for the assets
than the assets’ net present value to the firm, this is unlikely to be a good business decision
for a firm. As such, taking such a decision to sell would be considered a failure to fulfill one’s
fiduciary duties.
To see why, imagine that XYZ Corp. is a successful firm with windfall-generating AI assets. For
the purposes of simplified illustration, further imagine that those assets have a net present value to XYZ of $X trillion. Suppose further that the net present value to XYZ’s shareholders (i.e.,
after accounting for Windfall Clause obligations) was $X/3 trillion (i.e., one-third of the value
goes to shareholders, while two-thirds goes to the Windfall Clause). In considering whether tosell to an unbound firm, XYZ Corp., as the owner of the assets, should not accept any payment
less than $X trillion. This is because the sale price of the assets will count towards XYZ’s profit,
thus the Windfall Clause will apply to its proceeds from the sale. So, XYZ’s shareholders would
be worse-off for any sale price of less than the net present value of windfall-generating AI assets. If there is a sale, then, the Windfall Clause would receive as much or more present value
than it would if the signatory-firm held onto the assets.
Even given our hopes that these specific means of circumvention could be prevented, others
probably remain. Thus, we do not wish to project confidence that there will be no way for a

*
†

22

To avoid the problem of the parent potentially splitting profits between subsidiaries and thereby avoiding triggering the Clause,
the Clause could specify that the proper measure of the parent’s profits is the sum of its profits and the profits of all its subsidiaries.
The reason this is not a barrier to corporate tax avoidance is that “[corporate e]arnings are taxable wherever they occur (worldwide), but taxes are not due until or unless the earnings are brought back, or repatriated, to the U.S. Further, U.S. corporations
receive credit for foreign taxes paid to avoid double taxation.” Neely & Sherrer, supra note 207, at 3 n.1. Thus, as long as theearnings are kept offshore, taxes are not due on them until repatriated. The Windfall Clause need not suffer from this problem,since it could stipulate that it applies to profits of all subsidiaries, wherever earned.

signatory to circumvent the Clause. We expect that much future work will be aimed at drafting
and testing various potential Windfall Clauses to improve its reliability as a commitment mechanism.

A.3. “No firm with a realistic chance of developing windfall-generating AI
would sign the Clause.”
Would AI firms actually sign the Clause? While there remains significant uncertainty aroundthis question, there are several reasons to believe that it might be in firms’ interests to become
signatories to the Clause—i.e., they assess that the benefits of doing so outweigh the costs.
First, as mentioned above,215 the counterfactual case for a firm (i.e., what would have happened if they developed windfall-returning AI but had not signed the Clause) is plausibly notbusiness-as-usual. Instead, dramatic increases in concentration of wealth and power216—combined with mass unemployment217—could yield immense political pressure to tax or expropriate windfall-generating assets. Firms would have significant liability in this scenario as well—plausibly even greater than that imposed by the Clause. However, from a public and employee
relations perspective, the Clause may be more appealing than taxation because the Clause isa cooperative, proactive, and supererogatory action. So, to the extent that the Windfall Clausemerely replaces taxation, the Windfall Clause confers reputational benefits onto the signatory
at no additional cost.
Even if it were the case that the total expected benefits and costs from the Windfall Clause sum
to zero, the benefits from improved employee and public relations would accrue earlier (ideally, continuously from the signing date) than the costs. Thus, the firm would be able to capitalizeon the benefits (through increased revenues and decreased costs) earlier than it would bear
any costs. If those benefits and costs are equivalent atemporally, the earlier benefits would stilloutweigh the costs due to the time value of money.*
For these reasons, we expect that the Clause could be positive-sum in expectation for signatories. However, this is ultimately an empirical prediction, and we are mindful of many otherfactors that affect firms’ calculations which we may have failed to account for.
This objection does make an important point, though: the clock is ticking. Key leaders at major
AI firms have acknowledged the importance of examining the distributional effects of AI.218 The
Asilomar AI principles, which includes “Shared Prosperity: [t]he economic prosperity createdby AI should be shared broadly, to benefit all of humanity,”219 have been endorsed by leading
AI researchers at Google, OpenAI, Facebook, and many others.220 While these are all positive
signs, this sentiment could change in the future. If a firm gains a clear prospect of capturingwindfall profits, then the Clause will become more costly to them in expectation, making it lesslikely that they will sign it. Thus, we view this as a time-sensitive project.

A.4. “If the public benefits of the Windfall Clause are supposed to be large,
that is inconsistent with stating that the cost to firms will be small enoughthat they would be willing to sign the Clause.”
The argument being put forward here is that the following are inconsistent: (1) the Windfall
Clause is a valuable project,221 and (2) the Windfall Clause has low gross cost to firms.222 This
argument rests on the assumption that that the public policy benefits from the Windfall Clause
will be approximately equal to the costs to signatories. Thus, the claim that the Windfall Clausehas simultaneously large public benefits and small private costs is problematic.
We disagree, but the reasons for this disagreement are nuanced. First, some of the Windfall
Clause’s public benefits do not depend on the Clause actually ever being triggered. For example, the Clause could stabilize important societal and international relations223 and promote*

However, to the extent the Windfall Clause replaces ex post taxation, there may be public policy costs from making this tradeoff
ex ante, without the benefit of knowledge of future economic conditions.

23beneficial norms regarding the development of AI,224 all while incurring no or minimal monetary costs to its signatories. Knowledge that signatories have adopted the Clause could, in
itself, be sufficient to advance many of these goals, even if windfall profits are unlikely. As an
example of this first effect, knowledge that the Windfall Clause is in place could have societallystabilizing effects by diminishing popular concerns about harms from windfall scenarios, even
if those scenarios are very unlikely. Individuals that expect to be better situated to deal withadverse consequences from AI will likely worry less about its negative effects.225 The Windfall
Clause could give individuals a secure future in a world with windfall-generating AI, thus somewhat reducing their anxiety about its development.
Second, the time value of the Clause is different from shareholders’ perspective than from apublic policy perspective. Shareholders should exponentially discount the expected cost of
the Windfall Clause, as they would for other future debts.226 However, it is inappropriate to use
the same discount rate for many of the non-monetary goods that the Windfall Clause could
bring.227 For example, entrenched extreme concentrations of wealth and power could cause
the long-term future to be worse than it could be, and the badness of this is almost entirely independent of how quickly such concentration occurs in the near-term. Thus, the private costsof the Windfall Clause should be more heavily discounted than its public benefits, leading tothese benefits accrued to the public being greater than the private costs to signatories.

B. Unintended Consequences of the Windfall ClauseB.1. “The Windfall Clause reduces incentives to innovate.”
Some might worry that the Clause will diminish signatories’ incentives to innovate because it
caps the amount of private benefit that a given firm can gain in the future. Indeed, it is difficult
to predict the overall effects of something like the Windfall Clause on the incentives of signatories in general, much less of specific AI firms composed of different company cultures andbusiness models.
Nevertheless, we find several reasons to believe that the Clause would not significantly reduce incentives to innovate. For one, the Clause only targets extremely unlikely profit levels228
that therefore make up very little of signatories’ present expected value.229 Thus, divertingsome of those profits through the Clause should not seriously affect firms’ present incentives.
Further, by capping firm obligations at 50% of marginal profits,230 the Clause leaves room forinnovation to be invested in even at incredibly high profit levels.231
However, if the Clause did reduce incentives to innovate, this might be an acceptable outcome
for several reasons. Firstly, we expect firms to agree to the Clause only if it is largely in theirself-interest.232 Thus, the Clause is arguably in firms’ self-interest overall (i.e., even accounting
for any reduction in incentives to innovate) because it builds consumer goodwill,233 improves
employee relations,234 and reduces political risk.235 Secondly, unbridled incentives to innovate
are not necessarily always good, particularly when many of the potential downsides of that
innovation are externalized in the form of public harms.236 The Windfall Clause attempts to internalize some of these externalities to the signatory, which hopefully contributes to steering
innovation incentives in ways that minimize these negative externalities and compensate theirbearers.237 Finally, one must consider that under windfall scenarios the gains from innovation
are already substantial, suggesting that globally it is more important to focus on distribution ofgains than incentivizing additional innovation. Indeed, the public has and will continue to heavily subsidize the development of AI through, e.g., basic research, educating engineers, developing many of the infrastructural necessities for AI, etc., so it seems appropriate that they recoup
some of that investment, even if that means dampening incentives to innovate on the margin.

24

B.2. “The Windfall Clause will shift investment to competitive non-signatory
firms.”
The concern here is that, when multiple firms are competing for windfall profits, a firm boundby the Clause will be at a competitive disadvantage because unbound firms could offer higher
returns on new capital. That is, investors would prefer firms that are not subject to a “tax” ontheir profits in the form of the Windfall Clause. This is especially bad because it could meanthat more prosocial firms (i.e., ones that have signed the Clause) would be at a disadvantage
to non-signatory firms, making a prosocial “winner” of an AI development race less likely.238
This is a valid concern which warrants careful consideration. Our current best model for how
to address this is that the Clause could commit (or at least allow for the option of) distributionsof equity,* instead of cash. This could either take the form of stock options or contingent convertible bonds. This avoids the concern identified by allowing firms to, for example, issue new,preferred shares which would have superior claim to windfall profits compared to donees.
This significantly diminishes the concern that the Clause would dilute the value of new sharesissued in the company and allows the bound firm to raise capital unencumbered by debt owed
under the Clause.† Notably, firm management would still have fiduciary duties towards stockholding windfall donees.
Even with this as a potential solution, the Windfall Clause could still undesirably alter firms’
and investors’ incentives. Therefore, careful microeconomic analysis of various Windfall Functions and other Clause provisions should constitute a large portion of future investigations. If
a Windfall Clause would unavoidably create perverse incentives, it may not be a project worth
pursuing.

B.3. “The Windfall Clause draws attention to signatories in undesirableways”
One might worry that the Clause could draw undesirable attention to its signatories. Specifically, one might worry that agreement to the Clause implies that the signatory believes that“there is a realistic chance that in the next few decades [that signatory] will be a colossal [i.e.,
windfall-generating] company . . . .”239 Call this the “Colossus Claim.”240 Endorsement of the
Colossus Claim might generate criticism from various stakeholders (who would perceive theClaim as “hype and bluster”)241 and politicians (who would subject signatories to higher scrutiny if they perceive them to have endorsed the Claim).242
As a general note, one should not infer endorsement of the Colossus Claim from agreement to
the Clause. Indeed, due to management’s fiduciary duties to shareholders,243 a firm’s willingness to agree to the Clause should be negatively correlated with its probability of achieving
windfall profits in the near future. Thus, perhaps counterintuitively, agreement to the Clauseis evidence against the Colossus Claim (under the reasonable assumption that managers act
within their fiduciary obligations). However, we acknowledge that the public perception attached to firms may be informed by less rational, more instinctive reasoning which may leadto signatories being tagged as more in support of the Claim than is accurate. How the Windfall
Clause is framed in the public eye is thus an important element to think through.
For other important stakeholders—for example, investors, employees, competitors—the Clausedoes not add much new public information. Prominent tech entrepreneurs have already openly acknowledged the possibility of developing AI which could deliver extreme benefits, as
have several academic institutions and investors.244 Agreement to the Clause thus supplies
little new information on the firm’s AI prospects, except perhaps a downwards revision for thereasons just mentioned.

*†

To avoid problems associated with selling large stakes in companies, the equity should be nonvoting. See supra note 106.
This approach is admittedly more difficult, however, because it could require amending a corporate charter to create new classes of stock.

25For policymakers, the fact that the Clause acknowledges the (possibly very large) upsides from
AI is not necessarily a reason for opposition. Indeed, political support has remained consistentfor (domestic) firms achieving major technological breakthroughs.245 There remains a risk that
if policymakers infer support for the Colossus Claim from the signing of the Clause, signatories will become central targets if the state were to turn to tools such as nationalization in an
attempt to capture these benefits.

B.4. “The Windfall Clause will lead to moral licensing.”
Another objection might be that the Windfall Clause will have a moral licensing effect—i.e., itwill make signatories feel as though they have done something good, thereby making themfeel more comfortable acting unethically in other ways.246,*
One should always be wary of possible licensing effects. However, at the same time, many
policies are worth pursuing notwithstanding the possibility for licensing. The proper question,
then, is whether the Clause is worthwhile despite the possibility for moral licensing. For thereasons given throughout this report, we believe that it is.
None of this, however, should dampen constructive engagement between civil society groups
and AI firms. Indeed, part of the success of the Clause depends on governmental and popular pressure on signatories to abide by its terms and spirit. At the same time, adoption of theClause would be a significant and credible commitment for signatories, and therefore shouldbe celebrated.

C. Problems with the Design of the Windfall Clause
C.1. “Rule of law might not hold if windfall profits are achieved.”
The success of the Windfall Clause depends on its enforceability as a matter of law. No contract, however, is ever entirely safe from successful legal challenge. Thus, the Windfall Clause
would need to be drafted very carefully to maximize the probability of enforceability; this is acomplex task which requires more thorough treatment beyond what we have presented in thisreport.
A related set of concerns comes from the fact that a firm who would have obligations under
the Clause would, by definition, be one of the most powerful agents in the world. Thus, theClause might fail if the signatory uses its financial and technological advantages to undermine
enforcement of the Clause. Examples of such behaviors could include:• Defeating any legal challenges to its actions;• Finding unanticipated “loopholes” in the Clause, or ways to evade it; or• Bribing, threatening, or otherwise manipulating lawmakers, judges, witnesses, or law
enforcement.
By diminishing successful firms’ power, the Clause mildly mitigates some of these risks, but it
cannot completely prevent them. Some additional mechanisms that could help reduce theseissues include:• Selecting a venue or venues and governing law or laws with wide jurisdictional reach;• Selecting a venue or venues with stable and well-functioning enforcement mechanisms;• Giving windfall distributors an ownership stake in the signatory;• Stipulating that firms will pay for distributors’ attorney fees; or• Giving distributors access to any AI that could give signatories an advantage in litigation.

*

26

A related objection, also addressed in this subsection, is that the Windfall Clause will buy signatories political cover to get awaywith unethical behavior.

Still, the rule of law depends on factors far beyond the purview of this single project. Further,
the fact that the rule of law may not hold with the development of transformative AI is a broader
concern beyond the Windfall Clause. We look forward to working with others looking to ensurethat the rule of law persists even if truly transformative AI is achieved.

C.2. “The Windfall Clause operates like a progressive corporate income tax,
and the ideal corporate income tax rate is 0%.”
The Windfall Clause could be designed to operate like a progressive corporate income tax.247
Some commentators argue that the ideal corporate tax rate is 0%.248 One common argument
for this is that corporate income tax is not as progressive as its proponents think because corporate income is ultimately destined for shareholders, some of whom are wealthy, but many ofwhom are not.249 Better, then, to tax those wealthy shareholders more directly and let corporate profits flow less impeded to poorer ones.250 Additionally, current corporate taxes appear
to burden both shareholders and, to a lesser extent, workers.251
The Windfall Clause admittedly shares this flaw: it is an imperfect tool for differentially targeting
wealthy shareholders of successful firms. However, the Windfall Clause should not be regarded as a substitute for individual taxation or giving commitments. Rather, the Windfall Clause isa firm-level complement to individual-level obligations.
Giving commitments targeted to firms have some desirable properties. Firms may have greater
incentive to appear socially responsible, and thus are more amenable to the kinds of socialpressure that a robust discussion about the Windfall Clause would bring. The pool of potentially windfall-generating firms is much smaller and more stable than the number of potential
windfall-generating individuals, meaning that securing commitments from firms would probably capture more of the potential windfall than securing commitments from individuals. Thus,targeting firms as such seems reasonable. However, we encourage economic analysis of theClause to determine whether its incidence would unfairly burden workers or have other undesirable effects not foreseen here.

C.3. “The Windfall Clause undesirably leaves control of advanced AI in private hands.”
One might reasonably propose that all humans ought to have a say in the use of such a powerful tool as windfall-generating AI. The Windfall Clause distributes windfall profits from AI but
does not distribute control of it.* This risks exacerbating the current, plausibly undesirable
distribution of power between firms with the technology and everyone else, leading to imbalanced capacities to influence the development trajectory of transformative AI. This may raise
objections, particularly from those to whom the concentration of control of such a publicly
consequential technology in private actors’ hands is unacceptable.
We are sympathetic to these concerns, and indeed, acknowledge that we largely avoid discussing who ought to control advanced AI, and have instead focused on who ought to benefit
from it. The question of control is a more complex one, invoking different legal, economic,
and philosophical issues which deserve thorough deliberation and analysis beyond the scopeof this report. We hope that focus on profit here will serve as a useful starting point for large
future conversations about control of this powerful technology. It may be that such discussion
reveals that full distribution of control of advanced AI is desirable. But this report neither makes
nor examines that claim closely. Instead, we rest on what we hope is a modest premise that thefruits of one of the most transformative technologies ever—the culmination of human ingenuity—ought to be shared widely.
We do, however, hold firmly that the mechanism by which windfall profits is distributed shouldbe legitimate and accountable, as outlined in Section II. This is distinct from the question of*

To avoid certain legal issues, even if the windfall is distributed as equity rather than debt, such equity would be nonvoting. See
supra note 103. Therefore, even such a Clause would not distribute control of the AI.

27

who should control the technology. Thus, while the question of who should control the technology is left for further discussion, the question of how decisions are made as to who should
benefit from its bounty is affirmatively responded to in support of the appropriate distributionof decision-making power beyond private hands.

D. Alternatives to and Variants of the Windfall ClauseD.1. “Windfall profits should just be taxed.”
Some might object to—or be uneasy with—extra-governmental nature of windfall profits, perhaps arguing that the windfall should instead be taxed and spent by democratically accountable governments.252
Taxation certainly has many merits relative to the Windfall Clause. Distributive measures thatarise from democratic institutions are often more legitimate than extra-governmental ones.253
Additionally, given states’ substantial resources and powers, compliance with taxation might
be higher than compliance with the Clause. Given these merits, taxation remains a critical partof the larger AI policy conversation, and the Windfall Clause is not intended to be a substitutefor taxation schemes. We also note that, as a private contract, the Windfall Clause cannot supersede taxation.* Thus, if a state wants to tax the windfall, the Clause is not intended to stopit.† Indeed, taxation efforts that broadly align with the goals and design principles of the Windfall Clause are highly desirable.‡
However, there are also reasons to prefer the Clause to taxation under some circumstances.
Particularly in the near-term, an important consideration is political tractability. Given current
realities, we do not anticipate that legally enforceable taxation and global distribution of AI
windfall is politically feasible, whereas beginning a conversation around a voluntary commitment such as the Windfall Clause may be more so. Furthermore, all else equal, it is possiblethat signatories would be more receptive to donations rather than taxation in order to reap
the benefits of consumers, employees, and governments perceiving signatories to be socially
responsible.254 In other words, committing to distribute windfall through an exceptional act ofphilanthropy might benefit signatories in a way that merely complying with tax law does not.
This makes the Clause more aligned with the incentives of firms and thus plausibly more tractable compared to taxation.
The Clause is also plausibly more likely to be robust to firm lobbying efforts. In particular, if
preemptive taxation proves intractable, attempts to implement taxation post the developmentof windfall-generating AI will be much more difficult given the scale of the resources that a successful firm will have at their disposal.255 An ex ante commitment such as the Windfall Clausehopes to circumvent this issue, although there are certainly still comparable risks of well-resourced firms attempting to undermine enforcement of the Clause.§
Further, a primary advantage of the Clause over most current forms of taxation is that the

*
†
‡

§

28

And, conversely, companies cannot choose the corporate tax rate, but they can choose their own philanthropic efforts—i.e.,
corporate philanthropy is more tractable than tax reform.
We leave aside a more complicated discussion of whether and how a government might be able to tax windfall profits without
allowing the taxpaying corporation to deduct Clause obligations from its taxable income.
If a government taxes the windfall above current levels—either before or after deducting Clause obligations—signatories might
be excessively burdened. We therefore tentatively recommend that the Clause obligation can be superseded by an appropriate
tax, to prevent such excessive taxation of the windfall. However, it is important to think through what would be an appropriate
tax. For example, we do not think that a poorly thought through national tax should supersede a well-designed and functioning
global Windfall Clause, but we do think that a well-designed and broadly legitimate global tax should supersede the Clause. This
will be a very difficult distinction to encode in the Clause itself. Rather than attempt to do so ex ante, we recommend specifying
an ex post mechanism through which a signatory can petition to have the Clause superseded. See generally O’Keefe, supranote 93. An example of this could be appointing a global independent legal-ethical body that would judge whether a given tax
should supersede (part of) the Windfall Clause. Cf. id. at 25–29 (discussing ex post third-party resolution).
Readers might object that this claim is inconsistent with predictions made elsewhere in the report that there could be significant
public backlash to windfall profits if unfairly distributed, and that this backlash might result in policy adverse to firms. Of course,
both backlash and firm resistance thereto are possible. However, the objection is well-founded insofar as one of these forces
is likely to win out in the end. It is difficult to predict which “side” would likely “win.” However, the conflict process itself is likely
undesirable for all parties, since it will sink resources into a largely zero-sum fight. Thus, insofar as the Windfall Clause mitigatesthis conflict altogether, it is positive-sum.

Clause’s distribution mechanism is international rather than national. From a public policy
perspective, global philanthropy can better promote international cooperation and benefit,
whereas national taxation efforts would tend to overwhelmingly benefit the taxing nation’s
citizens rather than being globally (and therefore more effectively)256 distributed.257,* To ensurethat their citizens benefit, then, non-host nations must find a way to tax (or otherwise appropriate) the benefits from AI. Not all nations will be able to do this, however, and hence the host nation will reap most of the rewards of hosting a successful firm. The Windfall Clause could avoid
this by distributing benefits globally, not just overwhelmingly to the citizens of the firm’s nation.
Finally, the most effective philanthropic initiatives can often accomplish more good per dollar thannational governments,258 in part given the existing inequality between nations paired with thestrength of parochial interests.259 Indeed, it appears difficult to convince national governments
to fund more-cost-effective international projects over less-cost-effective domestic ones (as evidenced by the fact that they often choose not to under current conditions).260 As such, if one
were concerned about the efficacy of windfall distribution, an extra-governmental initiative suchas the Windfall Clause may in some circumstances be more successful on this measure. Further,
if it were the case that national governments could spend windfall profits more effectively thanprivate philanthropy, then distributors could simply remit payment to those national governments.
To summarize, we are sympathetic to concerns about charitable accountability, legitimacy,egalitarianism, and effectiveness. It is somewhat unclear whether the Windfall Clause is preferable to taxation on these measures, although there are reasons to believe that it could beunder current circumstances. Nevertheless, we are certainly open to taxation policies that
accomplish the Clause’s goals.

D.2. “We should rely on antitrust enforcement instead.”
One might hope that antitrust law will remedy any potential AI-services monopoly.261 Indeed,
past corporate behemoths faced intense antitrust scrutiny, leading to several large dissolutions.262 If that did happen, the necessity of the Clause would indeed be diminished263 because
it would address some issues associated with concentration of economic power.
However, it is not obvious that antitrust would be an appropriate or available tool for addressing a windfall-generating firm. The most important reason for this is that mere size or acquisition of monopoly power is not actionable under current antitrust law:
The mere possession of monopoly power, and the concomitant charging ofmonopoly prices, is not only not unlawful; it is an important element of thefree-market system. The opportunity to charge monopoly prices—at least fora short period—is what attracts “business acumen” in the first place; it induces
risk taking that produces innovation and economic growth. To safeguard the
incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.264
Thus, current265 American antitrust law could not address a mere AI monopoly unless it had
acquired that monopoly via prohibited anticompetitive conduct. If, as we hypothesize,266 AI
services are a natural monopoly, then an AI-services monopoly could result without prohibited
anticompetitive conduct. The Windfall Clause is most useful in such a scenario.
Ex post regulation of that monopoly might be desirable.267 However, depending on the circumstances, the Windfall Clause could make such regulation either:
1. Less necessary, because harms from an AI monopoly would be mitigated268 and benefits from monopoly profits widely shared;† or*†Furthermore, since already-wealthy nations will probably be the homes of windfall-generating companies, taxation would most
likely redistribute windfall almost entirely within the wealthiest nations.
Citizens would then have to weigh the costs of regulation (in the form of decreased windfall) against the benefits thereof (theerosion of monopoly).

29

2. Easier, because the wealth of the monopoly and its shareholders (and therefore theirpolitical power) would be diminished.*
Relatedly, part of the appeal of the Windfall Clause (as opposed to new laws to deal with potential AI market power) is that it could solve some problems associated therewith269 with minimal government intervention. Thus, under some circumstances, the Clause could be a more
tractable intervention than promoting new monopoly laws.

D.3. “We should establish a Sovereign Wealth Fund for AI.”
Another approach is to redistribute capital. One such proposed mechanism has been called
the “Sovereign Automation Fund (SAF)”,270 analogizing to the sovereign wealth funds we discuss above.271 The idea is that some public-benefiting group (either a government or a nonprofit) would acquire shares in AI companies.272 That group would then distribute inalienablevoting rights to some set of constituents (e.g., all people in the world) to provide democratic
control over the pooled shares.273 The constituents would also receive dividends from theSAF.274
The SAF has advantages and disadvantages relative to the Windfall Clause. One advantage isthat the SAF immediately affects all signatories.275 This is an advantage because it ensures thatsignatories are habituated to complying with the SAF and does not distort new investors’ returns, whereas the Windfall Clause does not affect signatories until they reach very high profit
levels.276 Thus, as a signatory approaches such high profits, it might “more strongly resist[]” theClause than the SAF.277
The SAF has many other desirable features, some of which it shares with the Windfall Clause.
First, like the Windfall Clause, the SAF would be “based on an asset that should appreciate as
automation and wealth in AI companies grows . . . .”278 Second, the SAF as described above
would give everyone actual and inalienable partial control over AI, not just money.279
However, the SAF also has disadvantages. The immediate nature of the SAF raises its costs.
Earlier obligations are more probable obligations and are therefore a higher expected costto the signatory. The fact that Windfall Clause obligations vest at only very high profit levels
dramatically reduces the expected cost of those obligations, and therefore might make firms
more amenable to the Clause.
Furthermore, corporate directors are likely to react negatively to an SAF attempting to acquirea significant voting share of the corporation, and could be incentivized to use a “poison pill” toprevent such an acquisition.280 Poison pills commonly prevent acquisition of shares as low as
10–15%281—far lower than an SAF would need to globally distribute meaningful control over AI
firms. Furthermore, acquiring and actively managing significant stakes in multiple competing
AI firms could trigger antitrust scrutiny of the SAF.282
A related downside to the SAF is that buying meaningful stakes in relevant technology companies would be extremely expensive. Indeed, for some relevant corporations, such as Alphabet,
this would be impossible due to their corporate structure.283
Governmental acquisition of firm shares might avoid these problems.284,285 However, this would
face intense political opposition as a perceived violation of liberal international norms against
expropriation.286 Further, such an acquisition could be subject to legal challenge as a taking
requiring just compensation to the firm (at least if done in the US).287
A Windfall Clause that uses an SAF-like structure for distributing the windfall might ultimately
be desirable. However, as with other specific distribution proposals, we leave that discussion
for a later date.

*30

Public-benefit organizations funded by the Windfall Clause could also operate as an effective countermeasure to lobbying by themonopoly.

D.4. “We should implement a Universal Basic Income instead.”
One possible variant* of the Windfall Clause is a firm-funded Universal Basic Income (UBI) program.288 Certainly, one of the Windfall Clause’s major advantages is that it retains the flexibility
to distribute funds in whatever way is globally welfare-maximizing. While it is plausible that a
UBI could be a suitable distribution mechanism in this vein, it is unlikely to be sufficient.
A UBI program could be a great boon for humanity. For example, evidence-based charity evaluator GiveWell289 finds that, commonsensically, cash transfers are very effective at ameliorating poverty.290 Distributing cash also has intuitive appeal and might avoid some of the accountability and oversight problems associated with other distribution proposals.
However, UBI has some shortcomings. One is that some programs appear to do more goodthan UBI-like cash transfers. GiveWell’s recent cost-effectiveness analyses conclude that several health interventions—such as deworming and malaria prevention—are more cost-effective
than cash grants.291 Thus, implementing a UBI-only distribution plan could fail to maximize total
welfare.
A related reason why a UBI-only windfall distribution plan would be suboptimal is that UBI
is unlikely to adequately spur investment in certain goods, such as public goods.292 Windfall
distributors charged with maximizing total welfare might therefore be able to achieve better
results through investing in public goods rather than through cash grants. However, new innovations in public goods funding like “Liberal Radicalism” could capture many of the benefits of
UBI while also incentivizing public goods funding.293 We are enthusiastic about the possibilityof using the Windfall Clause to experiment with this and other modes of distributing benefits
both widely and collectively.
Finally, UBI seems necessarily (as a “universal” program) poorly targeted towards the particular
harms that advanced AI could cause.294
Thus, if UBI is to be a part of the distribution plan, it should not be its entirety.

*

Strictly speaking, this could be a “permutation” rather than a true “alternative” because the Windfall Clause could simply implement a UBI program. Indeed, our Windfall Trust proposal, infra app. II(B), approximates this.

31

CONCLUSION
Artificial Intelligence may be poised to fundamentally change the nature of the global economy. While these changes may bring unprecedented bounty and improve quality of life acrossthe world, they also involve risks and potential turbulence. One challenge, then, is the substantial uncertainty in predictions about the timing, nature, and effects of these changes. In theface of such uncertainty, sound preparation demands that we invest in solutions for multiple
scenarios.
One possible future is a scenario in which advanced AI services result in unprecedented“windfall” profits that accrue to a very small number of actors. This scenario is highly undesirable, not only because humanity at large will have borne the risk of innovations along the way,
but also because the creation of such wealth might be accompanied by mass unemployment
and other occurrences that increase human suffering.
The Windfall Clause aims to address the downsides of such a scenario, if the development of
truly windfall-generating AI were to occur. With further refinement, the Windfall Clause could
be a significant, credible, and tractable way for AI firms to direct their inventions towards theenrichment of humanity generally and still reap substantial rewards for doing so.
The distributive implications of AI remain both pressing and unclear. We hope that this report contributes an ambitious and novel policy proposal to an already rich discussion on thissubject. We look forward to engaging with respondents, whose wide-ranging priorities andconcerns will strengthen this effort. More important than this policy itself, though, we lookforward to continuously contributing to broader conversations on the economic promises andchallenges of AI, and how to ensure AI benefits humanity as a whole.

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APPENDIX I: OTHER LEGAL ISSUESIn this Appendix, we outline further legal issues that warrant attention in considering the design and implementation of the Windfall Clause.

A. Bindingness
Signatories’ obligations under the Clause would be binding. First, as discussed above, theClause could impose obligations on distributors, such as publicizing the philanthropic effortsof the signatories and setting up philanthropic programs.295 In such a case, the Clause would
be a regular binding contract.296
Even if the Clause is purely donative (i.e., unsupported by return consideration by the distributors), it would be binding under the doctrine of promissory estoppel. The Restatement (Second) of Contracts § 90 contains the doctrine of promissory estoppel:(1) A promise which the promisor should reasonably expect to induce action
or forbearance on the part of the promisee or a third person and which does
induce such action or forbearance is binding if injustice can be avoided only
by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
(2) A charitable subscription [i.e., promise to donate] . . . is binding under Subsection (1) without proof that the promise induced action or forbearance.297
In comments thereto, the Restatement explains:
One of the functions of the doctrine of consideration is to deny enforcement
to a promise to make a gift. Such a promise is ordinarily enforced by virtue ofthe promisee’s reliance only if his conduct is foreseeable and reasonable andinvolves a definite and substantial change of position which would not haveoccurred if the promise had not been made. In some cases, however, otherpolicies reinforce the promisee’s claim. Thus the promisor might be unjustly
enriched if he could reclaim the subject of the promised gift after the promisee has improved it.
Subsection (2) identifies two other classes of cases in which the promisee’s
claim is similarly reinforced. American courts have traditionally favored charitable subscriptions and marriage settlements, and have found considerationin many cases where the element of exchange was doubtful or nonexistent.
Where recovery is rested on reliance in such cases, a probability of reliance isenough, and no effort is made to sort out mixed motives or to consider whether partial enforcement would be appropriate.298
The following illustrate application of this rule:
16. A orally promises to give her son B a tract of land to live on. As A intended,
B gives up a homestead elsewhere, takes possession of the land, lives there
for a year and makes substantial improvements. A’s promise is binding.299
17. A orally promises to pay B, a university, $100,000 in five annual installments for the purposes of its fund-raising campaign then in progress. The
promise is confirmed in writing by A’s agent, and two annual installments arepaid before A dies. The continuance of the fund-raising campaign by B is sufficient reliance to make the promise binding on A and his estate.300
Since Signatories to the Windfall Clause “should reasonably expect [the Clause] to induce
action or forbearance on the part of the promisee or a third person” (such as a distributor), theClause would be binding under this provision of the Restatement.301
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Some major jurisdictions—such as California302 and New York303—deviate slightly from the Restatement approach to charitable subscriptions by still requiring actual “action or forbearance”
by the promisee or a third party. The Clause would be binding even under these regimes, however, since actions like setting up distributors to eventually receive windfall or inducing otherpotential firms to sign onto the Clause would constitute adequate consideration even underthese more restrictive regimes.

B. Injunctive Relief
One potential failure mode for the Windfall Clause would be a court enjoining304 the donations.
The most obvious way this could happen would be that a firm obtains windfall profits, but adisgruntled shareholder files a derivative action to try to enjoin the obliged donations as a
violation of the corporation’s fiduciary duties. We explain here why we think such a challenge
would be unlikely to succeed under Delaware law.
“To succeed in a request for a permanent injunction, a party must show [1] actual success on
the merits; [2] that it would suffer irreparable harm if the injunction is not granted; and [3] thatthe balance of the equities favors it.”305 Injunction is an equitable remedy,306 meaning that the
Chancery Court retains wide discretion over whether to grant injunctive relief.307 As the thirdprong of the injunction test suggests, courts in equity weigh general fairness when deciding
whether to grant an injunction.

B.1. Explication of Injunction Test
As we argued above,308 we believe that a shareholder challenge to the Windfall Clause would
fail on the merits. We therefore focus on the second (irreparable harm) and third (balance ofequities) prongs here, to show why such a challenge would not warrant injunctive relief even
if it was successful on the merits.

B.1.i. Irreparable Harm
A court will issue an injunction only if the plaintiff can demonstrate that she will suffer “irreparable harm” unless the court issues an injunction. “Irreparable harm” is a legal term of art,
defined by the Delaware courts. Irreparable harm exists only when an award of monetary damages could not fairly and reasonably compensate the plaintiff,309 including when such an award
would rely upon speculation as to the extent of the harm suffered.310 For example, loss of aunique strategic business opportunity can constitute irreparable harm.311 However, neither the
possibility of great injury alone312 nor the “mere apprehension” of uncertain future damages313
constitute irreparable harm. To receive an injunction, the plaintiff must show a “reasonableapprehension” of a future wrong.314
Importantly, there is a “well-recognized legal principle that equity will enjoin a threatened breachof fiduciary duty.”315 Delaware courts have not explicated this basis for injunctive relief much,316
but it appears to be a per se rule: any threatened breach of fiduciary duty will support injunctive
relief, even if the consequences of the breach would not otherwise constitute irreparable harm.317

B.1.ii. Balance of Equities
A court will issue an injunction only when the harms from an injunction do not outweigh theharms to the plaintiff that an injunction will prevent.318 In performing this balancing test, a court
may consider harms to the public and innocent third parties.319 A court in equity will also refuse
to issue an injunction when it would affect the rights of parties not before the court.320

B.2. Application to Windfall Clause
A Delaware court will not enjoin a contract containing a Windfall Clause. Although executingof such a contract in violation of fiduciary obligations is arguably a per se irreparable harm, acourt of equity will not abrogate the contractual rights of innocent third parties.
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B.2.i. Irreparable Harm
The harm of losing windfall profits is not itself irreparable. Since the loss is purely monetaryand easily calculable, it is classically inappropriate for injunctive relief.
The more likely basis for enjoining a Windfall Clause is that windfall payments would constitute a “threatened breach of fiduciary duty.”321 Analytically, the probability of injunctive relief
on this basis depends on what, exactly, the “threatened breach” is. Two possibilities exist:
agreeing to a Windfall Clause and performing a Windfall Clause to which the corporation
already agreed.
A court will not enjoin mere agreement to a Windfall Clause. This is for two reasons. First, suchan agreement would not, on its own, constitute a breach of fiduciary duty unless windfall profits were imminent, for reasons explained above.322
Relatedly, given the current improbability of any specific firm generating windfall profits, mere
agreement to a Windfall Clause would support, at most, “mere apprehension” of a future harm.
Thus, no “reasonable apprehension” of irreparable harm would exist at the time of the agreement itself.
Performing a Windfall Clause in violation of fiduciary obligations, if possible,* would constitutean irreparable harm under the per se rule of duPont. Thus, whether a court would enjoin performance of a Windfall Clause turns on whether the balance of equities favors an injunction.

B.2.ii. Balance of Equities
A court will not enjoin performance of a binding Windfall Clause, even if such performance violates fiduciary duties. This is because a court in equity considers how an injunction will affectinnocent third parties. Enjoining performance of a Windfall Clause would severely harm theinnocent donee and public, so a court of equity is very unlikely to do so.
More specifically, courts in equity will virtually never abrogate contractual rights of an innocent
third party. “Equity follows the law . . . .”323 This means that “courts of equity will recognize andgive effect to all legal rules in their proper sphere . . . and that, beyond that, the policies reflected in rules of law will be extended to equitable estates by analogy where appropriate.”324
Thus, “[e]quity can not . . . abrogate a legal right contracted for by a party.”325 This principle iswell-recognized outside of Delaware too.326
Consider, for example, In re El Paso Corp. Shareholder Litigation327 That case addressed a
proposed merger between El Paso and Kinder Morgan:328[T]he parties entered into [a] “Merger Agreement.” The Merger Agreement
contain[ed] a commitment from El Paso to assist Kinder Morgan in the saleof [El Paso’s fossil fuel extraction and production] business, which Kinder
Morgan hoped could be accomplished before the closing of the Merger. The
Merger Agreement also contain[ed] a “no-shop” provision preventing El Paso
from affirmatively soliciting higher bids, but g[ave] the Board a fiduciary out inthe event it receive[d] a “Superior Proposal” from a third party for more than
50% of El Paso’s equity securities or consolidated assets.329
Plaintiffs moved for a mandatory injunction that contravened the terms of the Merger Agreement.330 The court found probable success on the merits331 and likely irreparable harm.332 How*

Note the peculiar result that follows if this is indeed possible: agreeing to a Windfall Clause should be permissible, see supra § III,but following through on that commitment might not be. This seems contradictory: either a fiduciary cannot contract to do something that might violate their fiduciary duties (no matter how unlikely such a contingency is), or a transaction that would otherwise
violate fiduciary obligations is permissible if it is the result of a business judgment that was reasonable in expectation. Given that
corporate fiduciaries must often make decisions on the basis of expected value, and that some such decisions will inevitably
turn out to have been poor deals for the corporation ex post, the latter interpretation should be correct. Thus, we expect that,
where agreement to a Windfall Clause is protected by the Business Judgment Rule, Delaware law does not require fiduciaries
to breach the Windfall agreement when performance thereof would commit the corporation to donate what would otherwise be“unreasonable” amounts of money.

35

ever, the court refused an injunction on the balancing prong of the equity test.333 This was
because of the form of the requested injunction:[P]laintiffs want an odd mixture of mandatory injunctive relief whereby I affirmatively permit El Paso to shop itself in parts or in whole during the period
between now and June 30, 2012, in contravention of the no-shop provision of
the Merger Agreement, and allow El Paso to terminate the Merger Agreement
on grounds not permitted by the Merger Agreement and without paying thetermination fee set forth in the Merger Agreement, but then to lift the injunction and then force Kinder Morgan to consummate the Merger “if no superiortransactions emerge.”334
In finding such a proposal inequitable, the court held that “that sort of injunction would poseserious inequity to Kinder Morgan, which did not agree to be bound by such a bargain.”335
Courts do sometimes consider enjoining fundamental corporate transactions that have alreadybegun, but almost always before closing, when parties’ legal rights have fully vested.
A notable exception to this is the Chancery Court’s decision in the famous Revlon case.336
There, Revlon’s board tried to defend against a hostile takeover by granting to a friendly bidder a “lock-up” option to purchase valuable assets and a breakup fee in case the friendly deal
failed.337 The court preliminarily enjoined escrowing and transfer of the lock-up assets andcancellation fee,338 despite the friendly bidder’s contractual rights thereto.339 The court heldthat “[i]n terms of relative hardship to the parties the need for both bidders to compete in themarketplace far outweighs the limiting of [the friendly bidder]’s contractual rights.”340 However,other language from the case suggests that the court did not view the friendly bidder as a truly
innocent third party: “[the friendly bidder] and Revlon considered the [asset lock-up and breakup fee] as combined security to [impermissibly] secure the exclusion of [the hostile bidder]from further participation.”341
A plaintiff unsuccessfully asked the Chancery Court to rescind342 a consummated merger in
Arnold v. Society for Savings Bancorp, Inc.343 Earlier in the same case, the Supreme Court
held that directors of the target corporation impermissibly made misleading statements in themerger proxy statement.344 However, the directors bore no personal liability due to a §102(b)(7) waiver.345 On remand, plaintiffs sought to rescind the merger. In an unpublished opinion, theChancery Court roundly rejected this as inequitable:
The equities in this case do not justify the extraordinary remedy of rescission. Rescission of the merger would unduly harm the acquiror, BoB, who hasrelied on the finality of the merger. Plaintiff has yet to demonstrate that BoB
engaged in any unlawful or improper activities in carrying out the merger.
BoB did not ignore Plaintiff’s claims and pursue an improper merger. Before
BoB completed the merger, this Court had ruled that Plaintiff’s claims lacked
a reasonable probability of success on the merits. Until Plaintiff demonstrates
otherwise, I consider BoB an innocent party who acquired Bancorp in goodfaith in an arms-length transaction. A court of equity should protect the rights
of an innocent acquiror, just as commercial law protects the rights of a goodfaith purchaser. On the present record, I believe it would be manifestly unfair
to BoB for the Court to rescind the merger. If Plaintiff can prove his aiding andabetting claim against BoB, then the balance of the equities may change. Nevertheless, practical obstacles would still prevent rescission of the merger.346
Note, however, that the court cites its prior rejection of plaintiff’s injunction request347 as evidence of its good faith. This suggests that absent such a ruling, its claim to good faith would
be weaker, though probably still sufficient.
Another Delaware case to explicitly address the issue of vested merger rights is Jedwab v.
MGM Grand Hotels, Inc.348 In that case, Kirk Kerkorian was a controlling shareholder of MGM

36

Grand Hotels.349 At Kerkorian’s direction, MGM “entered into an agreement with Bally Manufacturing Corporation . . . contemplating a merger between a Bally subsidiary and [MGM].”350 The
MGM board approved the proposed merger.351
A preferred stockholder asked the court to enjoin the transaction on the grounds that it “apportion[ed] the merger consideration [un]fairly among classes of the company’s stock.”352 The
court refused the injunction on the grounds that the plaintiff failed to satisfy the first prong of
the injunction test.353 In dicta on the balancing prong, however, the court wrote that “Bally’s
contract rights—while not dispositive—present an additional circumstance supporting the denial of the pending motion.”354 It paid similar deference to “the interests of the public common
stockholder . . . to have the proposed merger effectuated without judicial interference.”355 This
presumably refers to the payment such shareholders were to receive from the sale.356 In an
accompanying footnote, the court explained that “[h]istorically courts of equity have accorded
great deference to the rights of bona fide purchasers from trustees who have no notice of abreach of trust.”357
In light of all of the above evidence, it is very unlikely that a court of equity will enjoin performance to which a Windfall Clause distributor has a contractual right. Since the distributor
would have such a right, the Delaware Chancery Court would not enjoin performance of theClause.

C. Timing of a Challenge
For equitable claims, such as breach of fiduciary duty, the statute of limitations is not controlling.358 Instead, courts in equity apply the doctrine of “laches,” which “‘operates to preventthe enforcement of a claim in equity if the plaintiff delayed unreasonably in asserting the claim,
thereby causing the defendants to change their position to their detriment.’”359 “This doctrine‘is rooted in the maxim that equity aids the vigilant, not those who slumber on their rights.’”360
Nevertheless, since “equity follows the law,” “absent unusual circumstances, the analogous
statute of limitations will be given great weight in deciding whether the plaintiff’s claim isbarred by laches.”361 “The analogous limitations period for a breach of fiduciary duty claim
is three years.”362 The three-year limitations period also “applies [by analogy] to shareholder
derivative actions which seek recovery of damages or other essentially legal relief.”363 The limitations period starts (i.e., the cause of action “accrues”) “at the time of the wrongful act, even
if the plaintiff is ignorant of the cause of action.”364
Importantly for the purposes of a Windfall Clause, the continued performance of a challenged
contract does not count as a continuing wrong. The case Kahn v. Seaboard Corp.365 addressedan allegedly self-dealing contract entered into in 1986.366 The contract chartered seven Seaboard vessels for ten years.367 Plaintiffs filed suit in 1990 (i.e., more than three years after the
alleged improper transaction)368 under the theory that continued performance of the conflictedtransaction constituted a continuing wrong, rendering the action timely.369 The court rejected
this argument:
The wrong attempted to be alleged is the use of control over Seaboard torequire it to enter into a contract that was detrimental to it and beneficial,
indirectly, to the defendants. Any such wrong occurred at the time that enforceable legal rights against Seaboard were created. Suit could have beenbrought immediately thereafter to rescind the contract and for nominal damages which are traditionally available in contract actions. Complete and adequate relief, if justified, could be shaped immediately or at any point thereafter.
This type of case is unlike a continuing tort where the defendant continues,
without right, an action injurious to plaintiff. Where a continuing wrong acts
as an answer to the defense of limitations it is typically the case that plaintiff
can prove her claim by reference only to actions within the limitations period.
Thus, for example, if plaintiff is complaining about a nuisance (a noise for ex37

ample) emitted by a neighboring plant for, say five years, plaintiff can prove
her claim by proving the elements of the claim which occur daily or weekly or
whenever, within the limitation period. It is irrelevant for limitations purposesthat these daily or weekly invasions have been going on for years. Here, however, the “continuing wrong” is performance of a contract. It is implicitly admitted that payments were made by Seaboard as provided in the contract. Thereis no claim that payments in excess of those contemplated by the time charter
have been made. So long as the time charter is not rescinded, the payments
it calls for are legal obligations, not wrongs. Thus, unlike a continuing wrong
the only liability matter to be litigated involves defendants’ 1986 actions inauthorizing the creation of these contract rights and liabilities.370
Thus, potential derivative suit plaintiffs would have three years from the time the Clause issigned to challenge it. This means that late-stage challenges to the Clause are very unlikely to
succeed under now-existing law.

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APPENDIX II: THREE SKETCHES OF POSSIBLE
WINDFALL DISTRIBUTION SYSTEMSThis Appendix briefly lists three different forms a windfall distribution system could take in lightof the desirable characteristics as outlined in Section II. These three proposals for distributors
are outlined along with explanation of each proposal’s various features, especially as they
relate to the public policy and firm motivations for the Clause.371
We stress that each of these is, at this stage, a mere sketch of a proposal. Once firms agree tothe Windfall Clause, distributors might include any of these, each of these, some hybrid of each,or something else entirely.* We look forward to further public engagement on how to optimally
distribute proceeds from the Windfall Clause. We specifically examine four features of each plan:
1. Its structure;
2. Its functioning: what distributors’ goals will be and how they will accomplish them;
3. Its accountability and legitimacy: how the plan’s distributors will be kept safe from
improper interference with its mission and have broad approval from ultimate beneficiaries;† and4. How the plan will advance firms’ interests.

A. Global Wellbeing Windfall Fund
Under this plan (the Global Wellbeing Windfall Fund, or GWWF), the distributor is a multimember body with the goal of finding and funding effective welfare-maximizing projects.

A.1. Structure
The GWWF is a multimember funding body.‡ GWWF members—which we will call “managers”—collaboratively identify and give grants to promising projects to improve global welfare:372

Successful Developer

Automatic Payments to

GWWF

Grants to

Effective Welfare-Maximizing Projects
Figure 1: Global Wellbeing Windfall Fund Payment Flow*†‡

One might draw further inspiration from the alternatives we examine infra § V(D).
Given the large amounts of money potentially at stake, designing accountable distribution systems is extremely important.
The reasons for having multiple members are discussed in the next subsection.

39

A.2. Functioning
The GWWF would have the general goal of making grants based on empirical evidence andwith the aim of maximizing global welfare. This goal could be constrained or broadened as politically feasible,* but at minimum should also explicitly entail commitments to the observationof human rights in pursuit of its mission.
GWWF managers would be experts in welfare-relevant fields such as public health, public policy, economics, and psychology.† They could function individually or in interdisciplinary teams.‡
The experts would only release funding to highly cost-effective programs.373

A.3. Accountability and Legitimacy
The GWWF would control a lot of money. Our aim is to enable them to use that money to maximize welfare, free from inappropriate outside interference that would direct the funds towards
parochial or corrupt uses. The GWWF could implement a number of features to accomplish
this. Security measures the GWWF could use include:• Requiring that grants be approved by multiple374 or a majority of GWWF managers;• Enabling other GWWF managers to veto suspicious grants (if a majority is not required);• Recruiting managers from and domiciling managers in different countries, to prevent asingle country from exercising undue influence over grantmaking decisions;§• Preventing managers from approving grants that primarily benefit their own nation or
their host nation;• Anonymizing voting on whether to fund certain projects;375• Limiting the amount of funding that a single nation can receive, or which a single grant
can convey;¶ and• Establishing procedures for removing and replacing corrupted GWWF managers.
Apart from these accountability features, the GWWF could make use of a novel accountability
structure proposed in a law review article by Geoffrey A. Manne: “contract plaintiffs.”376 The
problem that Manne seeks to address is limited legal oversight of charities: usually, only state
attorneys general have standing to sue nonprofit managers for misuse of funds, but they havepoor incentives to do so.377 Thus, Manne proposes a contractual solution wherein nonprofits
are required by charter to give a third party (the “contract plaintiffs”) the right to monitor andsue their managers for failure to advance the purposes of the nonprofit.378 Including such arequirement in the GWWF’s charter(s) would ensure their strict adherence to the charitablegoals of the GWWF.379

A.4. Firm Interests
A successful firm would benefit from the GWWF by having its brand directly associated withextremely effective global wellbeing projects. To help the firm promote this connection, the
GWWF could be required to release information (e.g., videos, photographs, reports) about
*

†
‡
§
¶

40

For example, it could or could not include animal welfare and the welfare of future human generations. Grounding GWWF-funded projects in existing consensus commitments (for example, the United Nations’ Sustainable Development Goals, cf. infra app.
II(C)) could garner greater consensus for the GWWF and its activities.
National diversity could also be important. For example, the most effective philanthropic opportunities are concentrated in theworld’s poorest nations. See Your Dollar Goes Further Overseas, supra note 256. However, residents of other nations might
object to receiving no aid, even if such a scheme is welfare-maximizing. To ensure the political and geopolitical feasibility of thescheme, therefore, the Clause could specify that projects in every country will receive a set amount of money per year, possibly
in proportion to their population.
Where appropriate (e.g., for large, controversial, or speculative grants), the managers could be permitted or even required to hire
domain-area experts for further consultation.
If the functional unit of the GWWF was teams, rather than individuals, then the GWWF security measures would apply to teams.
For maximum security, these should ideally be countries that have a strong rule of law; that respect contract rights; that have adequate self-defense forces; and that are unlikely to coordinate with many other hosts. Of course, diversity of membership could
provide additional legitimacy and decision-making benefits.
Much as ATMs limit depositors’ daily withdrawals. The idea is that if a country successfully corrupts a single grant or GWWF
manager, the damage will be limited. Since in some (indeed, perhaps many) cases grants will be urgently needed, this limitation
could perhaps be waived pending approval by a supermajority of other managers.

its projects that would help the firm publicize its charitable activities. Grants could also be
conditional on publicizing the firm’s connection to the project, to directly garner goodwill fromproject beneficiaries.

B. Windfall TrustThis distributor proposal would democratically distribute the windfall through a “Windfall
Trust.”*,380

B.1. StructureThis plan would distribute windfall money to a trust† over which all living people would beequal beneficiaries. Once the Windfall Clause is triggered, the successful firm will distributewindfall payments to Windfall Trust. All living individuals (or perhaps all adults) would be beneficiaries of the Trust:Successful Developer

Automatic Payments toWindfall Trust

Equal Beneficiaries of

Figure 2: Windfall Trust Payment Flow

B.2. Functioning
As its name suggests, Windfall Trust will function much as a regular trust, operating for the financial benefit of its beneficiaries—i.e., everyone. As such, it will have a wide variety of tools at
its disposal to improve its beneficiaries welfare, including distributing a windfall as required by
the terms of the Trust and investing for the benefit of future beneficiaries.381 The result, therefore, would be a trust working to enrich all humans through means consistent with any publicbenefit restrictions in its charter.

*†

We do not have a specific single jurisdiction in mind when describing Windfall Trust. Some of what follows is therefore necessarily stylized, though on occasion we note how aspects of this proposal interact with particular relevant legal regimes. However, weare optimistic that what follows is generally feasible as a matter of law.
We are intentionally leaving for a later date more complicated discussions about implementing such a trust. Open issues would
include whether such a trust could qualify as charitable and the issue of creating and administering a trust for such a large number of people.

41

B.3. Accountability and Legitimacy
As with the GWWF, the Windfall Trust should be domiciled in a country with low risk of nationalization or expropriation. Furthermore, again like the GWWF, the Clause could hedge against
nationalization and expropriation by designating multiple Windfall Trusts in different nations,with a mechanism for cutting windfall flows off from corrupted Trusts and creating new ones ifnecessary.
Beneficiaries would also be able to hold trustees of the Trust accountable through traditional
means of fiduciary accountability.382 Thus, they would hopefully feel that the Trust’s management is legitimately serving their interests.

B.4. Firm Interests
All Windfall Trust beneficiaries—i.e., everyone—would have a reason to have goodwill towards
a successful firm (or at least to not feel animus towards it). Additionally, per its terms (and perhaps subject to the assent of a majority of living beneficiaries), the Windfall Trust could potentially offer a lucrative buyout of the firm or its assets, thus allowing the firm to recoup some of
their commitments under the Clause. This makes the Windfall Trust potentially more appealing
than the other distribution proposals here, since it would allow some of the pledged windfall
to flow back to the firm’s investors.*
C. AI for Good Fund
The AI for Good Fund (AI4G) is inspired by existing proposals (also under the name “AI for
Good”) to use AI to advance humanitarian causes like the United Nations’ Sustainable Development Goals (SDGs).383,† The UN Secretary General called for such an approach in his 2018
Strategy on New Technologies.384

*

†

42

Of course, ex post those investors would have been better off if the firm had never signed the Clause. But, all else equal, they
are arguably better-off under the Windfall Trust proposal than under, e.g., the GWWF, since the Windfall Trust proposal could
redirect some of the pledged windfall back to the firm and therefore its shareholders through a buyout or asset acquisition,
whereas the GWWF could not.
As the SDGs are accomplished (either due to the efforts of the AI4G or because we accomplish them before the Windfall Clauseis triggered), the set of challenges addressed by the AI4G could expand to include advancement of other global consensuses,
such as human rights treaties, nonproliferation treaties, and environmental treaties.

C.1. Structure
AI4G would consist of several “pods,” each of which is tasked with using AI to advance theSDGs.385 An Oversight Body would have the authority to allocate funding to create, monitor,
combine, split, and retire pods based on performance and changing needs. To avoid possible
redundancy,* pods would not be targeted at a specific SDG but would rather focus on a domain of AI applications relevant to the SDGs. For example:

Successful Developer

Automatic Payments toOversight Body

Funding and Monitoring

Environmental
Sciences Pod

HealthSciences Pod

Infrastructure
Pod

Figure 3: AI for Good Fund Payment Flow
Each pod would be authorized to use its funding to pursue its mission by, e.g., hiring domain
experts, hiring AI researchers, creating training data (e.g., hiring people to demonstrate certain
tasks in robotics), paying for access to compute, paying for access to existing AI systems, paying for overhead, building national and local capacity to implement identified solutions, andpaying for expert advisors.†

C.2. Functioning
Pods would have broad latitude in how they choose to pursue their mandate, provided thatthey consult appropriate experts, use or address‡ AI in their work, and tether their work to theadvancement of the SDGs or similar consensus goals (as determined by the Oversight Body).

*

†

‡

For example, the first three SDGs (“[e]nd poverty in all its forms everywhere,” “[e]nd hunger, achieve food security and improved
nutrition, and promote sustainable agriculture,” and “[e]nsure healthy lives and promote well-being for all at all ages,” see id.) are
related problems and presumably have related solutions. It would therefore be counterproductively duplicative to have a distinct
pod for each.
Some of this (e.g., existing AI systems) could come from the firm. However, the public might react negatively to pods paying thefirm for help in accomplishing the SDGs. The Clause could therefore allow the firm to deduct in-kind donations to AI4G fromits Clause obligations. Although this would be economically equivalent to pods paying for services from the firm, this alteredscheme might be received better by the public. To avoid corruption of the altruistic ends of AI4G, however, in-kind donations
from the firm should be allowed only if the pod requests them—i.e., if they are the most effective means for advancing the pod’s
mission.
For example, one pod might be dedicated to alleviating automation-induced unemployment. Such a pod could—but need not—use AI in its work. For example, it could instead pay people to perform socially valuable tasks for which no natural market exists(and which automation cannot easily replace), such as becoming more educated or engaging with their community. (Similar
schemes have been suggested in, e.g., Ford, supra note 6, at 172–93; Posner & Weyl, supra note 204, at 205–49; Rifkin,supra note 6, at 236–74.)

43

C.3. Accountability and Legitimacy
The primary source of security for AI4G would be that it is pursuing consensus-driven work. As
with the other distributor proposals, AI4G pods could be distributed among diverse, politicallystable states to minimize the possibility of external undesired interference.
Furthermore, pods’ mandates could instruct that the outputs, if applied responsibly, are stabilizing—that is, pods’ work will hopefully improve the political environment by incrementallycreating a world that is, e.g., richer, more peaceful, less discriminatory, more highly educated,and more equitable.*If, instead of directing windfall directly to pods, the Clause provides for an Oversight Body tofund and actively manage the pods (as we suggest above),† then security of the Oversight
Body will be crucial to the security of this proposal. We imagine that the Oversight Body could
be made most secure by, first, providing that multiple stakeholders govern it. For example, itsboard could be divided between national governments, AI firms,‡ development experts, anddemocratically elected representatives. The Oversight Body would also be secure because it
could not release money other than to pods, which would spend money free from any improper influence by the Oversight Body.§

C.4. Firm Interests
As with the other distributor proposals, the fact that AI4G will bring universal (or at least verybroad) benefit will earn the firm goodwill. Furthermore, since the projects will use AI, the firm
will be able to credibly demonstrate that AI is a universal boon. The fact that AI4G would needAI expertise both in the Oversight Body and implementation creates an opportunity for the lab(and even other signatories) to be involved in AI4G and therefore closely associate themselveswith it.

*
†
‡
§

44

Indeed, one pod might be tasked with promoting international stability.
We anticipate that the active approach is preferable to a fixed approach due to both the potential for progress on SDGs necessitating a shift in priorities and due to the emergence of new and unanticipated global challenges with which AI4G could help.
The reason to include AI firms would be that they would have expertise to judge potential altruistic applications of AI.
A contract plaintiff, see generally supra app. II(A)(3), could have standing and incentive to challenge any improper Oversight
Body actions, thus maintaining the pods’ independence and the general effectiveness of AI4G.

ENDNOTES
1
2
3
4
5
6

7
8
9
10
11
12
13
14
15

16

17
18

19
20
21
22

23
24

25

See generally Robert N. Anthony et al., Accounting: Text & Cases 66 (11th ed. 2004). We anticipate the need for future discussion on signatories’
accounting methods, especially to allow firms to prudently reinvest profits without the Clause punishing them for doing so. For the purposes of thisintroductory report, however, we think this definition is sufficient.
See, e.g., Manuel Trajtenberg, Artificial Intelligence as the Next GPT: A Political-Economy Perspective, in The Economics of Artificial Intelligence: An Agenda 175 (Ajay K. Agrawal et al. eds, 2019).
See infra § I(B)(1)(ii).
See infra §§ I(B)(1)(i)–(ii).
See Katja Grace et al., When Will AI Exceed Human Performance?: Evidence from AI Experts (2018), https://perma.cc/2K2D-LE3A (“Researchers
believe there is a 50% chance of AI outperforming humans in all tasks in 45 years and of automating all human jobs in 120 years . . . .”).
This has centered most visibly on the issue of AI applications beginning to replace human labor in many sectors. See, e.g., Jonathan P. Allen,
Technology and Inequality (2017); Erik Brynjolfsson & Andrew Mcafee, The Second Machine Age (2014); John Danaher, Automationand Utopia (2019); Allan Dafoe, AI Governance: A Research Agenda 32 (Aug. 27, 2018), https://perma.cc/4KG2-MTL3; Martin Ford, Riseof the Robots (2015); Martin Ford, The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future(2009); Michael C. Horowitz et al., Artificial Intelligence and National Security 14–19 (July 2018), https://perma.cc/4GCY-LUVL; Jerry
Kaplan, Humans Need Not Apply (2015); James Manyika et al., Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation(2017), https://perma.cc/XRU5-2A77; Jeremy Rifkin, The End of Work (1995); Aaron Smith & Janna Anderson, AI, Robotics, and the Futureof Jobs (Aug. 6, 2014), https://perma.cc/S8PN-UKJY; The Economics of Artificial Intelligence: An Agenda, supra note 2; Darrell M. West,The Future of Work (2018); Carl Benedikt Frey & Michael A. Osborne, The Future of Employment: How Susceptible Are Jobs to Computerisation?, 114 Technological Forecasting & Soc. Change 254 (2017); Jeffrey D. Sachs & Laurence J. Kotlikoff, Smart Machines and Long-Term
Misery (Nat’l Bureau Econ. Research, Working Paper No. 18629, 2012), https://perma.cc/MS34-B3EK; Asilomar AI Principles, Future of Life Inst.,
https://perma.cc/AU9J-X239 (archived Oct. 31, 2018); Sergey Brin, 2017 Founders’ Letter, Alphabet: Investor Relations (2017), https://perma.
cc/59PF-WB4R; Catherine Clifford, Bill Gates: ‘A.I. Can Be Our Friend’, CNBC (Feb. 4, 2018, 2:34 PM), https://perma.cc/L2U6-JL7M; Catherine Clifford, Elon Musk: Robots Will Take Your Jobs, Government Will Have To Pay Your Wage, CNBC (Nov. 4, 2016, 2:19 PM), https://perma.cc/QY7V-PSZD;David Rotman, Technology and Inequality, MIT Tech. Rev. (Oct. 21, 2014), https://perma.cc/AV7L-63QE; Ian Sample, Joseph Stiglitz On Artificial
Intelligence: ‘We’re Going Towards A More Divided Society’, Guardian (Sept. 8, 2018), https://perma.cc/9PAC-TUL8; Richard Wike & Bruce Stokes,
In Advanced and Emerging Economies Alike, Worries About Job Automation, Pew Res. Ctr. (Sept. 13, 2018), https://perma.cc/YAX5-5XRK.
See generally Anna Jobin et al., Artificial Intelligence: The Global Landscape of Ethics Guidelines (2019) (preprint version), https://perma.cc/9AES2X8D
See Nick Bostrom, Superintelligence 254 (2014).
Stylized examples of possible distribution mechanisms are offered infra app. II.
Additional legal aspects of the Clause are analyzed infra app. I.
See Nick Bostrom et al., Public Policy and Superintelligent AI: A Vector Field Approach, in Ethics of Artificial Intelligence (S. M. Liao ed.,forthcoming 2019) (manuscript version 4.3 at 5–6, 12–14), https://perma.cc/SN54-HKEG.
See generally Brynjolfsson & McAfee, supra note 6, at 126–46.
See Bostrom et al., supra note 11, at 10.
See, e.g., Smith & Anderson, supra note 6, at 5, 44–48; Frey & Osborne, supra note 6.
See Bostrom, supra note 8, at 59–61; cf. Greg Allen & Taniel Chan, Artificial Intelligence & National Security 17 (2017), https://perma.cc/
HL2J-6Y4K (“Humans do not yet know how to replicate all the technologies and capabilities of nature, but the fact that these capabilities exist innature proves that they are indeed possible. . . . Humans do not know what the ultimate technological performance limit for autonomous robotics
is, but the ultimate limit can be no lower than the very high level of performance that nature has proven possible . . .”); Ford, supra note 6, at
83–128 (describing automation of white-collar jobs); Grace et al., supra note 5, at 2 (“Taking the mean over each individual, the aggregate forecast
gave a 50% chance of [the arrival of machines that can accomplish, without aid, every task better and more cheaply than humans] occurring within
45 years and a 10% chance of it occurring within 9 years.”).
Cf. Daron Acemoglu & Pascual Restrepo, Modeling Automation (Massachusetts Inst. Tech. Dep’t Econ. Working Paper No. 18-02, 2018), http://ssrn.
com/abstract=3123798 (“[I]n a task-based framework automation, conceptualized as the expansion of the set of tasks that can be produced by machines, has very different effects. It always reduces the labor share and it reduces labor demand and the equilibrium wage unless the productivity
gains from automation are sufficiently large.”).
See Brynjolfsson & McAfee, supra note 6, at 178; Kaplan, supra note 6, at 13, 131–58.
The relationship between automation and job availability is not straightforward, and one cannot assume that automation (or even elimination of somejobs) will inevitably lead to net job loss. See infra note 25 (collecting sources predicting that automation will not result in mass unemployability). In thepast automation has not led to widespread unemployability. See Robots, IGM Forum (February 25th, 2014, 1:55 PM), https://perma.cc/N4UD-HE7N?type=image. This could continue to be the case due to, for example, AI-enabled further specialization of white-collar labor, continued demand forspecifically human-produced goods and services, or high demand for human inputs into automation research and implementation. See Kai-Fu Lee,AI Superpowers 155–57 (2018); cf. Daron Acemoglu & Pascual Restrepo, Artificial Intelligence, Automation, and Work (Nat’l Bureau Econ. Research,Working Paper No. 24196, 2018). “However, the historical tendency for employment and wages to increase as technological progress occurs is anempirical, historical phenomenon; it is not a law of nature or of economics.” Stephen J. DeCanio, Robots and Humans—Complements or Substitutes,
49 J. Macroecon. 280, 281 (2016), https://perma.cc/HE2G-98TQ; accord Brynjolfsson & McAfee, supra note 6, at 128. Thus, the net effect ofautomation on human employability depends crucially on the elasticity of substitution between human and robotic labor. See DeCanio, supra. Under
plausible—but by no means inevitable or uncontroversial—assumptions about this parameter, automation will depress median wages, see id. at 289,
and possibly lead to persistent mass unemployment, see, e.g., Karen Harris et al., Labor 2030: The Collision of Demographics, Automation
and Inequality 25 (2018), https://perma.cc/LPU8-DRRA (“By 2030, employers will need 20% to 25% fewer workers, equivalent to 30 million to 40
million jobs in the US . . . To put these numbers in context, during the Great Recession, US employment fell rapidly from its peak in January 2008 to
its trough in February 2010 by nearly 9 million jobs, or 6.3% of total employment.”); Robots and Artificial Intelligence, IGM Forum (June 30, 2017, 9:28
AM), https://perma.cc/2FB9-HQSR?type=image (28% of surveyed economists agreed or strongly agreed that “[h]olding labor market institutions andjob training fixed, rising use of robots and artificial intelligence is likely to increase substantially the number of workers in advanced countries who are
unemployed for long periods.”).
This framing taken from CGP Grey, Humans Need Not Apply, YouTube (Aug. 13, 2014), https://www.youtube.com/watch?v=7Pq-S557XQU.
See Ford, supra note 6, at xv, 83–128. Contra Wike & Stokes, supra note 6 (“Most also see a role for individuals. This is particularly true in the U.S,
Argentina and Brazil, where more than seven-in-ten say individuals themselves have a lot of responsibility for making sure they are prepared forthe future economy. Again, Japan—where just 39% express this opinion—is an outlier.”).
See Ford, supra note 6, at 32.
Dani Rodrik, New Technologies, Global Value Chains, and the Developing Economies 14 (Pathways for Prosperity Comm’n Background Paper Series,
Paper No. 1, 2018), https://perma.cc/ZJ7Q-E4YZ; see also Rifkin, supra note 6, at 203–07; Brahima Sangafowa Coulibaly, Africa’s Race Against theMachines, Brookings (June 16, 2017), https://perma.cc/K6NH-WGRA; Andrew Norton, Automation Will End the Dream of Rapid Economic Growthfor Poorer Countries, Guardian (Sept. 20, 2016), https://perma.cc/XX9V-XHTN; cf. Rifkin, supra note 6, at 69–82 (discussing how earlier bouts ofautomation disproportionately impacted another group of disadvantaged laborers: African-Americans); Lukas Schlogl & Andy Sumner, The Rise of
the Robot Reserve Army: Automation and the Future of Economic Development, Work, and Wages in Developing Countries 1 (Ctr. for Global Dev.,
Working Paper No. 487, July 2018), https://perma.cc/69JP-BJXA (“Automation is likely to affect developing countries in different ways to the way
automation affects high-income countries. The poorer a country is, the more jobs it has that are in principle automatable because the kinds of jobs
common in developing countries—such as routine agricultural work—are substantially more susceptible to automation than the service jobs—which
require creative work or face-to-face interaction—that dominate high-income economies. This matters because employment generation is crucial tospreading the benefits of economic growth broadly and to reducing global poverty. We argue that the rise of a global ‘robot reserve army’ will haveprofound effects on labor markets and structural transformation in developing countries, but rather than causing mass unemployment, AI and robots
are more likely to lead to stagnant wages and deindustrialisation. As agricultural and manufacturing jobs are automated, workers will continue to flood
the service sector, driving down wages. This will itself hinder poverty reduction and likely put upward pressure on national inequality, weakening thepoverty-reducing power of growth, and potentially placing the existing social contract under strain, or even possibly limiting the emergence of more
inclusive social contracts.”).
See Ford, supra note 6, at 117–28; cf. Harris et al., supra note 18, at 38 (“The primary macroeconomic consequence of higher inequality [due toautomation] is to constrain growth by limiting the growth of effective demand vs. the growth in supply. Despite many technological innovations thatwill increase the capacity for goods and services, the inability of effective demand to keep pace may ultimately reduce growth.”).
See, e.g., Smith & Anderson, supra note 6, at 5 (“Half of the [surveyed] experts (48%) envision a future in which robots and digital agents havedisplaced significant numbers of both blue- and white-collar workers—with many expressing concern that this will lead to vast increases in income
inequality, masses of people who are effectively unemployable, and breakdowns in the social order. The other half of the experts who responded
to this survey (52%) expect that technology will not displace more jobs than it creates by 2025.”); cf. Grace et al., supra note 5 (“Researchers
believe there is a 50% chance of AI outperforming humans in all tasks in 45 years and of automating all human jobs in 120 years . . .”).
See generally supra note 6 (collecting citations). But see, e.g., OECD, Putting Faces to the Jobs at Risk of Automation 3 (2018), https://perma.
cc/2T5V-SX7U (“[E]ven if technology makes certain jobs redundant, it also creates new jobs and complements existing ones.”); PwC, 2018 AI

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27
28
29

30
31
32
33

34

35

36
37
38
39

40
41
42

43
44
45

46

47

46

Predictions 3 (2018), https://perma.cc/9F9U-WHY6 (“Th[e] unparalleled combination [of human and AI labor] will become the new normal in theworkforce of the future.”); PwC, Will Robots Really Steal Our Jobs? 8 (2018), https://perma.cc/Q63R-CFLE (“[T]he net long term job impact ofautomation w[ill] . . . likely to be neutral or even slightly positive.”); Jason Furman, Chairman, Council of Econ. Advisers, Is This Time Different? The
Opportunities and Challenges of Artificial Intelligence, Remarks at AI Now: The Social and Economic Implications of Artificial Intelligence Technologies in the Near Term (July 7, 2016) (expanded transcript available at https://perma.cc/S84L-LZZX); Bryan Caplan, Technological Unemployment
and Work, Lib. Econ. & Liberty (Feb. 20, 2019), https://perma.cc/ME4C-W5WB; Paul Krugman, Don’t Blame Robots for Low Wages, N.Y. Times (Mar.
14, 2019), https://perma.cc/85N7-N8DF; Noah Smith, Basic Income’s Backers Complicate Their Cause with Some Bad Arguments, Salt Lake Trib.
(June 22, 2019), https://perma.cc/RZ55-Y2WD; Noah Smith, Don’t Expect Robots to Take Everyone’s Job, Bloomberg: Opinion (Nov. 1, 2018, 6:00
AM), https://perma.cc/4FVU-ZC58; Noah Smith, Robots Might Turn Out to Be Great Co-Workers, Bloomberg: Opinion (June 18, 2019, 10:48 AM),https://perma.cc/6XTP-JM4L; but cf. John D. Stoll, Humans Are Winning the Battle with Robots, Wall Street J. (Nov. 1, 2018) (describing difficulties
in adopting robotic manufacturing).
See, e.g., Celinda Lake, Public Opinion on Disability Issues 21 (2016), https://perma.cc/JJJ7-JRMT (81% of Americans support funding disability
insurance); Northeastern U. & Gallup, Optimism & Anxiety: Views on the Impact of Artificial Intelligence and Higher Education’s
Response 21 (2018), https://perma.cc/5MS5-LYYB (“A clear majority of U.S. adults overall (61%) say employers should fund these programs for those
who lose their jobs because of new technology. Of the options presented to Americans surveyed, this was the most popular source of funding forretraining, with the federal government second at 50%.”); Khiara M. Bridges, The Deserving Poor, The Undeserving Poor, and Class-Based Affirmative Action, 66 Emory L.J. 1049, 1070–79 (2017); Wike & Stokes, supra note 6 (“[R]oughly half or more believe employers have a lot of responsibility [for making sure the workforce has the education and skills necessary for success] in Argentina, Brazil, South Africa, Hungary, Italy, the U.S.,
Canada and Greece.”).
See supra note 25.
See Bostrom et al., supra note 11, at 2, 5–6, 12–15.
See Smith & Anderson, supra note 6, at 53–59; Bostrom et al., supra note 11, at 10–11; Betsey Stevenson, AI, Income, Employment, and Meaning,in The Economics of Artificial Intelligence: An Agenda, supra note 2, ch. 7, at 2, https://perma.cc/ZB45-EG6G; Martin Ford, Economic Growth
Isn’t Over, But It Doesn’t Create Jobs Like It Used To, Harv. Bus. Rev. (Mar. 14, 2016), https://perma.cc/229L-5793 (“[T]echnology (and specificallyartificial intelligence) is going to intertwine with any innovations that occur in the future, making them less labor-intensive. Unless we change our
economic rules—perhaps with something like a guaranteed income—broad-based prosperity will remain elusive, even if those robust innovations
do eventually show up.”); Sachs & Kotlikoff, supra note 6; Wike & Stokes, supra note 6 (“Many in the nations surveyed also believe that the greateruse of robots and computers will worsen inequality between the rich and the poor. More than eight-in-ten in Greece, Argentina, Japan and Brazil
express this view, as do more than seven-in-ten in Canada, South Africa, the U.S. and Hungary. Worsening inequality due to technological advances is a particular concern among the more highly educated in countries such as Japan, South Africa and Brazil.”); cf. West, supra note 6, at 127–54(describing political implications of automation, including unequal distribution of its benefits).
See generally Brynjolfsson & McAfee, supra note 6, at 148–62.
See, e.g., Harris et al., supra note 18, at 37; Rifkin, supra note 6, at 13; Jeffrey D. Sachs, R&D, Structural Transformation, and the Distribution ofIncome, in The Economics of Artificial Intelligence: An Agenda, supra note 2, ch. 13, https://perma.cc/RE8F-TBLA.
See Harris et al., supra note 18, at 31–41.
There are primarily two ways in which an increase in capital share as a result of automation could come about. First, the marginal productivity of
automation technology could rise, and that of human work could rise less quickly or fall. In such a scenario, the capital share will increase. See,e.g., Harris et al., supra note 18, at 37.
Second, the owners of AI capital could have market power, allowing them to extract profits from their capital and potentially increase the capitalshare regardless of the marginal productivity of AI capital. Market concentration across most industries has indeed increased substantially overrecent decades, at least in the United States. See Jan De Loecker & Jan Eeckhout, The Rise of Market Power and the Macroeconomic Implications(Nat’l Bureau Econ. Research, Working Paper No. 23687, 2017), https://perma.cc/KSL4-MYA3. This trend appears to be due at least in part to technological developments which favor economies of scale and has indeed increased profit shares in the affected industries. See Gustavo Grullon etal., Are US Industries Becoming More Concentrated?, 23 Rev. Fin. 697 (2019), https://perma.cc/N7Y7-2PQ5. If the future AI market obeys this trend,transformative technological developments in AI will result in substantial profits for the leading firm(s), at the expense of prices and wages.
See Lee, supra note 18, at 146 (“The positive-feedback loop generated by increasing amounts of data means that AI-driven industries naturally tend
towards monopoly, simultaneously driving down prices and eliminating competition between firms.”); Gus Bekdash, Using Human History, Psychology, and Biology to Make AI Safe for Humans, in Artificial Intelligence Safety and Security 167, 171 (Roman V. Yampolskiy ed., 2018); Allan
Dafoe, Co-Director, Future of Humanity Inst. Centre for the Governance of AI, Governance of Artificial Intelligence, Talk at Effective Altruism Global
2017: London (Nov. 5, 2017), https://www.youtube.com/watch?v=RWKHx2bE1H4 (“It’s plausibly the case that AI industries and services are natural
global oligopolies or monopolies.”); Carrick Flynn, AI Governance Landscape, Effective Altruism (Sept. 25, 2018), https://perma.cc/29ZY-FWXA(“[M]ost AI services have characteristics of a natural monopoly or an oligopoly. There’s not much room for competition, and there’s not really muchroom for small businesses.”); cf. Bostrom et al., supra note 11, at 10 (discussing first-mover advantages in AI).
To be clear, our concern here is not one of the typical concerns over supracompetitive oligopoly pricing. Cf. Haydn Belfield, From Tech Giants toa Tech Colossus: Objections to the Windfall Clause (2019) (unpublished manuscript) (on file with author) (asserting that the Windfall Clause fails to
address monopoly power). The Windfall Clause is poorly equipped to combat monopoly pricing. Accord id. Rather, the primary concern is simply
the extreme concentration of wealth and economic power resulting from a hypothetical AI oligopoly.
At the same time, the Windfall Clause does address some harms from monopoly pricing. Classical antitrust theory identifies two distinct harms frommonopoly pricing: deadweight loss from supramarginal pricing and transfer of surplus from consumers to producers. The Windfall Clause does notaddress the first but offers a partial remedy to the second through redistribution. Traditional antitrust remedies are more appropriate for the firstproblem and anticompetitive worries generally.
See, e.g., Allen, supra note 6, at 14–15, 30–32, 49–51; Brynjolfsson & McAfee, supra note 6, at 148–62 (discussing “winner-take-all” dynamics
in the digital economy); Ford, supra note 6, at 75–79.
See Dafoe, supra note 6, at 32.
Hal R. Varian, High-Technology Industries and Market Structure (Sept. 4, 2001) (unpublished manuscript), https://perma.cc/DZ2B-E7GT; see also
Council of Econ. Advisers, Benefits of Competition and Indicators of Market Power (2016), https://perma.cc/CF7L-6PS4; See Loecker &Eeckhout, supra note 33.
Note, however, that there is substantial uncertainty about the impacts of AI. See Dafoe, supra note 6, at 18–21. For example, the already-diminishing returns to data, see Hal Varian, Chief Economist, Google, Keynote Address at the Lear Conference: Is There a Data Barrier to Entry? (June 25,2015), https://perma.cc/U2LF-W4RJ, and greater learning efficiency of new algorithms may combine to obviate the need for the massive datasets inthe future—perhaps all that will be needed will be a connection to the Internet. Simulations can perform a similar role, effectively substituting computing power for data. See Tim Hwang, Computational Power and the Social Impact of Artificial Intelligence 34–44 (Mar. 23, 2018) (unpublishedmanuscript), https://ssrn.com/abstract=3147971.
Cf. K. Eric Drexler, Reframing Superintelligence: Comprehensive AI Services as General Intelligence 50–62, 73–78 (Future of Humanity Inst., Technical Rept. No. 2019-1), https://perma.cc/4Y7P-EPGB (describing a model in which advanced AI services are performed not by a single agent, but by
a coordinated system of multiple AI service providers).
See generally Stefan Gosepath, Equality, Stan. Encyclopedia Phil. (Edward N. Zalta ed., 2011), https://perma.cc/33GP-FULN.
See, e.g., Gallup News Serv., Gallup Social Poll Social Series: Mood of the Nation 2 (2018), https://perma.cc/3PZL-MZRR (66% of Americans unsatisfied with “[t]he way income and wealth are distributed in the U.S.”); Pew Research Ctr., Economies of Emerging Markets Better
Rated During Difficult Times 19–24 (2013), https://perma.cc/2HN9-GM6N (“In 31 of the 39 countries surveyed, half or more of the population
believe that the gap between the rich and the poor is a very big problem in their societies.”).
See, e.g., Néstor Gandelman & Rubén Hernández-Murillo, Risk Aversion at the Country Level (Fed. Reserve Bank of St. Louis Working Paper No.
2014-005B), https://perma.cc/YB3U-98GM.
Of course, such transfers have distortionary effects that must be accounted for. See generally Daniel Carroll, The Economics of Taxation, Forefront, Spring 2012, at 16, https://perma.cc/YU7D-YGLA.
The upwards redistribution of income from workers to shareholders from AI might also suppress aggregate demand, hampering overall economic
growth. See Harris et al., supra note 18, at 31–41. However, the overall effect of inequality on growth is ambiguous:We’ve surveyed one channel whereby inequality may increase growth [higher investment levels] and three channels by which it may slow growth[less total human capital, higher likelihood of efficiency-reducing taxation, and higher likelihood of unrest]. A natural question is: Which of theseeffects dominate? Does inequality raise or lower growth? Unfortunately, the available statistical data are unable to answer this question. Althoughsome economists claim to find evidence that inequality is on average bad for growth, others claim the data point in the opposite direction. One ofthe obstacles to getting a clear answer is that inequality itself is difficult to measure. Thus, we cannot say that inequality has no effect on growth,
only that the data are not yet sufficient to tell us what the possible effect is.
David Weil, Economic Growth: International Edition 409 (3d e., Kindle ed. 2016).
See Luca Agnello et al., Income Inequality, Fiscal Stimuli and Political (In)stability, 24 Int’l Tax & Pub. Fin. 484 (2017); Alberto Alesina & Roberto
Perrotti, Income Distribution, Political Instability, and Investment, 40 Eur. Econ. Rev. 1203 (1996); Inequality, Populism, and Redistribution, IGM
Forum (Oct. 9, 2019, 11:08 AM), https://perma.cc/S333-ECM7?type=image. But see Richard A. Posner, Equality, Wealth, and Political Stability, 13 J.L.,
Econ., & Org. 344 (1997); but cf. Luisa Blanco & Robin Grier, Long Live Democracy: The Determinants of Political Instability in Latin America, 45 J.
Dev. Stud. 76 (2009) (finding a nonlinear relationship between income inequality and political instability). For more on the relationship between
the Windfall Clause and stability, see infra § I(B)(1)(iii).
See Derek A. Epp & Enrico Borghetto, Economic Inequality and Legislative Agendas in Europe (Feb. 5, 2018) (unpublished working paper), https://

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enricoborghetto.netlify.com/working_paper/EuroInequality.pdf; Martín A. Rossi, Wealth and Political Power: Evidence from the Foundation of
Buenos Aires (Aug. 2011) (unpublished manuscript), https://perma.cc/FT6Q-TV9J; cf. Benjamin I. Page et al., Democracy and the Policy Preferencesof Wealthy Americans, 11 Persp. on Pol. 52 (2013) (finding that the policy preferences of very wealthy Americans are more likely to be represented
in law, despite those preferences differing from most Americans).
Cf. Bekdash, supra note 34, at 171 (discussing the risk of “perpetual incumbency”). But cf. Madeleine I.G. Daepp et al., The Mortality of Companies,
12 J. Royal Soc’y Interface 20150120 (2015) (“[T]he typical half-life of a publicly traded company is about a decade, regardless of businesssector.”).
For discussion of how the Windfall Clause relates to other policy proposals that can achieve this end, see infra § V(D).
Bostrom et al., supra note 11, at 8.
This concern already looms large among many workers globally. See Wike & Stokes, supra note 6 (“In all 10 advanced and emerging economies
polled, large majorities say that in the next 50 years robots and computers will probably or definitely do much of the work currently done byhumans. In three countries—Greece, South Africa and Argentina—four-in-ten or more believe this will definitely happen. And most believe that
increasing automation will have negative consequences for jobs. Large majorities in each nation surveyed think ordinary people will have a hardtime finding jobs as a result of automation. Relatively few predict new, better-paying jobs will be created by technological advances.”).
Cf. Horowitz et al., supra note 6, at 15–19. Most individuals believe that governments are responsible for ensuring workers’ success in the face of
job automation. See Wike & Stokes, supra note 6 (“Government looms large in the minds of many. Nearly eight-in-ten Argentines say government has a lot of responsibility for ensuring that the nation’s workforce has the right skills and education to succeed in the future, and more thanseven-in-ten hold this view in South Africa, Brazil, Greece and Italy. Only in the U.S. do fewer than half [35%] believe the government has a lot of
responsibility for preparing the nation’s workforce.”).
Cf. Rifkin, supra note 6, at 208–17; Seymour Martin Lipset, Some Social Requisites of Democracy: Economic Development and Political Legitimacy, 53 Am. Pol. Sci. Rev. 69 (1959); Daniel Treisman, Income, Democracy, and Leader Turnover, 59. Am. J. Pol. Sci. 927 (2015); Therese F. Azeng &Thierry U. Yogo, Youth Unemployment and Political Instability in Selected Developing Countries (Afr. Dev. Bank Grp., Working Paper No. 171, 2013),
https://perma.cc/4SG3-6HVM; Aniruddha Bagchi & Jomon A. Paul, Youth Unemployment and Terrorism in the MENAP (Middle East, North Africa,
Afghanistan, and Pakistan) Region, 64 Socio-econ. Planning Sci. 9 (2018) (“Youth unemployment increases domestic terrorism in MENAP countries.”); Efraim Benmelech et al., Economic Conditions and the Quality of Suicide Terrorism (Nat’l Bureau Econ. Research, Working Paper No. 16320,
2010), https://perma.cc/RRN3-ASLP (“High levels of unemployment enable terror organizations to recruit more educated, mature and experienced
suicide terrorists who in turn attack more important Israeli targets.”). But see Benmelech et al., supra, at 2 (“A growing body of empirical literatureshows that poverty and economic conditions are not directly correlated with the occurrence of terrorism. The lack of correlation between the frequency of terror attacks and economic conditions, combined with the privileged background of suicide terrorist found in earlier studies, suggeststhat economic conditions do not have a direct and straightforward effect on terrorism.” (citations omitted))
Cf. Bruno Biais & Enrico Perotti, Machiavellian Privatization, 92 Am. Econ. Rev. 240 (2002) (“When median-class voters a priori favor redistributive
policies, a strategic privatization program allocating them enough shares can induce a voting shift away from left-wing parties whose policy would
reduce the value of shareholdings.”); Denise DiPasquale & Edward L. Glaeser, Incentives and Social Capital: Are Homeowners Better Citizens?,
45 J. Urb. Econ. 354 (1999) (“Homeownership may encourage investment in local amenities and social capital, because homeownership gives
individuals an incentive to improve their community and because homeownership creates barriers to mobility.”); Saumitra Jha, Financial Asset
Holdings and Political Attitudes: Evidence from Revolutionary England, 130 Q.J. Econ. 1485 (2015) (suggesting that incentives created by financial
asset-holding enabled the end of dictatorial rule and democratic reforms in England); Markku Kaustia et al., Stock Ownership and Political Behavior: Evidence from Demutualizations, 62 Mgmt. Sci. 945 (2016) (finding that exogenous increased stock ownership generated greater support forright-of-center policies).
See, e.g., Jeffrey Ding, Deciphering China’s AI Dream 30–31 (2018), https://perma.cc/SUV6-3K4S; IEEE, Ethically Aligned Design (version 2,n.d.), https://perma.cc/X7PN-FTFA; Asilomar AI Principles, supra note 6; Brin, supra note 6; DeepMind Ethics & Society, DeepMind, https://perma.
cc/H8MY-QPG9 (archived Oct. 22, 2019); Alex Hern, Chinese Search Firm Baidu Joins Global AI Ethics Body, Guardian (Oct. 17, 2018), https://perma.cc/Z4C3-FRXD; Elsa Kania & Rogier Creemers, Xi Jinping Calls for ‘Healthy Development’ of AI (Translation), New America: Digichina (Nov.
5, 2018), https://perma.cc/9JD2-M5WT; OpenAI Charter, OpenAI (Apr. 9, 2018), https://perma.cc/J29Y-2PU8; Our Approach: Microsoft AI Principles,
Microsoft, https://perma.cc/52D9-E7PV (archived Oct. 31, 2018); Sundar Pichai, AI at Google: Our Principles, Google: Blog (June 7, 2018), https://perma.cc/UV53-7SV3; Tenets, Partnership On AI, https://perma.cc/SJQ9-VH4Q (archived Oct. 31, 2018).
See, e.g., AI for Good Global Summit, Intl. Telecomm. Union, https://aiforgood.itu.int/ (last visited Nov. 6, 2019).
See, e.g., Thomas Metzinger, EU Guidelines: Ethics washing made in Europe, Der Tagesspiegel (Apr. 8, 2019, 3:48 PM), https://perma.cc/
S5TH-A444.
See, e.g., Eric Johnson, How will AI change your life? AI Now Institute founders Kate Crawford and Meredith Whittaker explain., Recode Decode(Apr 8, 2019, 6:20 AM), https://perma.cc/2BM2-J9VC.
See, e.g., Daniel Susser, Ethics Alone Can’t Fix Big Tech, Slate (Apr. 17, 2019, 11:45 AM), https://perma.cc/8HQU-UFKH.
Cf. infra § III.
See, e.g., PwC, Handbook On Corporate Social Responsibility In India 8 (2013), https://perma.cc/5J48-R3CG; Veronica Besmer, The Legal
Character of Private Codes of Conduct: More Than Just A Pseudo-Formal Gloss on Corporate Social Responsibility, 2 Hastings Bus. L.J. 279,
291–92 (2006); Miriam A. Cherry, The Law and Economics of Corporate Social Responsibility and Greenwashing, 14 U.C. Davis Bus. L.J. 281, 283(2014); Paul R. Portney, The (Not So) New Corporate Social Responsibility: An Empirical Perspective, 2 Rev. Envtl. Econ. & Pol’y 261, 265 (2008);
James J. Waters, Achieving World Trade Organization Compliance for Export Processing Zones While Maintaining Economic Competitiveness forDeveloping Countries, 63 Duke L.J. 481, 518 (2013).
See Marc Orlitzky & John D. Benjamin, Corporate Social Performance and Firm Risk: A Meta-Analytic Review, 40 Bus. & Soc’y 369, 391 (2001) (“[I]n the data set covering the past two decades, risk is negatively correlated with CSP [i.e., corporate social performance]. In fact, among all risk measures, high CSP appears to be most highly negatively correlated with total market risk. Furthermore, the better a firm’s CSP reputation, the lower
is its risk. Thus, a firm that is socially responsible and responsive may be able to increase interpersonal trust between and among internal andexternal stakeholders, build social capital, lower transaction costs, and, therefore, ultimately reduce uncertainty about its financial performance.”);see also Judd F. Sneirson, The Sustainable Corporation and Shareholder Profits, 46 Wake Forest L. Rev. 541, 543 n.10 (2011) (collecting sources).
But see David J. Vogel, Is there a Market for Virtue?: The Business Case for Corporate Social Responsibility, 47 Cal. Mgmt. Rev. 19 (2005).
See Marc Orlitzky et al., Corporate Social and Financial Performance: A Meta-analysis, 24 Org. Stud. 403, 417–19 (2003).
See id. at 423–24.
David J. Vogel, The Market For Virtue 73 (2006) (“For a subset of firms, CSR does appear to make business sense. These firms fall into two
broad categories . . . For a few firms, CSR is a part of their corporate strategy and business identity. . . . A second category of firms for whom CSR
makes business sense are those that have been targeted by activists, who are concerned that they could be targeted, largely because of the visibility of their brands.”); Michael E. Porter & Mark R. Kramer, Strategy And Society: The Link Between Competitive Advantage and Corporate Social
Responsibility, Harv. Bus. Rev., Dec. 2006, at 37.
See Employees of Microsoft, An Open Letter to Microsoft: Don’t Bid on the US Military’s Project JEDI, Medium (Oct. 12, 2018), https://perma.cc/
PGU4-HHZR; Sheera Frenkel, Microsoft Employees Question C.E.O. Over Company’s Contract With ICE, N.Y. Times (July 26, 2018), https://perma.
cc/Z2CZ-9WHZ; Google Should Not Be In Business Of War, Say Employees, BBC News (Apr. 5, 2018), https://perma.cc/J63U-TVDG; Andrea Shalal,
Researchers To Boycott South Korean University Over AI Weapons Work, Reuters (Apr. 4, 2018), https://perma.cc/A2H6-NGN9; Laura Sydell, Tech
Workers Demand CEOs Stop Doing Business With ICE, Other U.S. Agencies, NPR (July 14, 2018), https://perma.cc/494V-VHEL; cf. Ryan Gallagher,
Senior Google Scientist Resigns over “Forfeiture of Our Values” in China, The Intercept (Sept. 13, 2018 12:15 PM), https://perma.cc/S8RQ-YDE2;
Naomi Nix, Google Drops Out of Pentagon’s $10 Billion Cloud Competition, Bloomberg (Oct. 8, 2018), https://www.bloomberg.com/news/articles/2018-10-08/google-drops-out-of-pentagon-s-10-billion-cloud-competition (“‘We are not bidding on the . . . contract because . . . we couldn’t
be assured that it would align with our AI Principles,’ a Google spokesman said in a statement. . . . The Tech Workers Coalition, which advocatesfor giving employees a say in technology company decisions, said in a statement that Google’s decision to withdraw from the cloud competition
stemmed from ‘sustained’ pressure from tech workers who ‘have significant power, and are increasingly willing to use it.’”); Brad Smith, Facial Recognition Technology: The Need For Public Regulation And Corporate Responsibility, Microsoft: Microsoft on the Issues (July 13, 2018), https://perma.cc/LQ28-Z2BL.
Cf. Grace et al., supra note 5, at 2 (“Forty-eight percent of respondents [i.e., AI experts] think that research on minimizing the risks of AI should beprioritized by society more than the status quo (with only 12% wishing for less).”); Peter Holley, Tech Leaders: Killer Robots Would Be ‘Dangerously
Destabilizing’ Force In The World, Wash. Post (July 19, 2018), https://perma.cc/R83K-GNVL (“In total, more than 160 organizations and 2,460
individuals from 90 countries promised this week not to participate in or support the development and use of lethal autonomous weapons.”).
Cf. Daniel B. Turban & Daniel W. Greening, Corporate Social Performance and Organizational Attractiveness to Prospective Employees, 40 Acad.
Mgmt. J. 658 (1997), https://perma.cc/HA4U-FKKW.
See Robert H. Frank, What Price The Moral High Ground? 71–91 (2004); Karine Nyborg & Tao Zhang, Is Corporate Social Responsibility Associated with Lower Wages?, 55 Envtl. & Resource Econ. 107 (2013).
See Nyborg & Zhang, supra note 69, at 113. A more recent study similarly found a 30% wage premium for executives in the “sin” industries ofalcohol, gambling, and tobacco. See Jiri Novak & Pawel Bilinski, Social Stigma and Executive Compensation, 96 J. Banking & Fin. 169 (2015).
See Hannes Koppel & Tobias Regner, Corporate Social Responsibility in the Work Place, 17 Experimental Econ. 347 (2014); Lea Cassar, Job Mission as a Substitute for Monetary Incentives: Experimental Evidence (Univ. of Zurich, Dep’t of Econ., Working Paper No. 177, 2014), https://perma.
cc/7NXW-R3EG.
See, e.g., Hal Varian, Artificial Intelligence, Economics, and Industrial Organization (Nat’l Bureau Econ. Research, Working Paper No. 24839, July2018) (“[T]he main bottleneck [to industrial implementation of AI is] now . . . analysts who can implement these machine learning systems.”); Caleb

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Watney, Reducing Entry Barriers in the Development and Application of AI 2 (R Street Pol’y Study No. 153, Oct. 2018), https://perma.cc/52C7-C53G(“Perhaps the single biggest bottleneck in AI development and application today is the supply of skilled data scientists and machine-learning
engineers. Typical AI specialists can expect to earn between $300,000 and $500,000 at top tech firms; numbers that are significantly higher thantheir peers in other computer-science-related subfields. In addition to these ballooning salaries, industry experts . . . have pointed to the scarcityof adequate AI talent as the largest factor behind slow application in the economy.” (footnote omitted)); Jeremy Kahn, Sky-High Salaries Are the
Weapons in the AI Talent War, Bloomberg Businessweek (Feb. 13, 2018), https://www.bloomberg.com/news/articles/2018-02-13/in-the-war-for-aitalent-sky-high-salaries-are-the-weapons; Cade Metz, A.I. Researchers Are Making More Than $1 Million, Even at a Nonprofit, N.Y. Times (Apr. 19,2018), https://perma.cc/LQ9H-6GSD; Cade Metz, Tech Giants Are Paying Huge Salaries for Scarce A.I. Talent, N.Y. Times (Oct. 22, 2017), https://perma.cc/5LAH-QJFE. But see Peter Yuen, Million Dollar Salaries for AI Researchers? Well, We Quants Have Seen this Movie Before, Medium:
Good Audience (Apr. 22. 2018), https://perma.cc/Q455-BFWA.
See Daniel W. Greening & Daniel B. Turban, Corporate Social Performance as a Competitive Advantage in Attracting a Quality Workforce, 39 Bus.
& Soc’y 254 (2000); M. Todd Henderson & Anup Malani, Corporate Philanthropy and the Market for Altruism, 109 Colum. L. Rev. 571, 578 (2009);
Jeanne M. Logsdon et al., Corporate Philanthropy: Strategic Responses to the Firm’s Stakeholders, 19 Nonprofit & Voluntary Sector Q. 93, 104(1990); Lance Moir & Richard J. Taffler, Does Corporate Philanthropy Exist?: Business Giving to the Arts in the U.K., 54 J. Bus. Ethics 149, 154–57(2004).
Although the Windfall Clause is a form of self-regulation, “[i]ndustry prefers voluntary compliance to avoid the costs of formal compliance.” Bekdash, supra note 34, at 192.
See, e.g., Richard Waters, The Great Silicon Valley Land Grab, Fin. Times (Aug. 24, 2017), https://www.ft.com/content/82bc282e-8790-11e7-bf50e1c239b45787.
See supra § I(B)(1)(ii).
See, e.g., Lina M. Khan, Note, Amazon’s Antitrust Paradox, 126 Yale L.J. 710, 746–83 (2017), Matt Stoller, The Evidence is Piling Up—Silicon Valley is
Being Destroyed, U.K. Bus. Insider (Apr. 19, 2017), https://perma.cc/3GY7-6ESV; Technology Firms Are Both the Friend and the Foe of Competition,
Economist (Nov. 15, 2018), https://perma.cc/Q4BE-R6TK; Kenneth P. Vogel, New America, a Google-Funded Think Tank, Faces Backlash for Firing
a Google Critic, N.Y. Times (Sept. 1, 2017), https://perma.cc/HY2G-U3WU; David Weigel, Breaking From Tech Giants, Democrats Consider Becoming
An Antimonopoly Party, Wash. Post, (Sept. 4, 2017), https://perma.cc/2NL3-6TA4; cf. History’s Biggest Firms, Economist, (July 5, 2018), https://perma.cc/RQD2-THKS.
See, e.g., Jim Brusden, EU Efforts to Impose Heavier Taxes on Tech Giants Gather Momentum, Fin. Times (Sept. 16, 2017), https://www.ft.com/
content/10e81e8c-9ace-11e7-8cd4-932067fbf946 (detailing EU efforts to levy higher taxes on tech firms).
See, e.g., David Remnick, Cambridge Analytica and a Moral Reckoning in Silicon Valley, New Yorker (Apr. 2, 2018), https://perma.cc/N7GJ-W9G2.
Cf. Eve Smith, The Techlash against Amazon, Facebook, and Google—And What They Can Do, Economist (Jan. 20, 2018), https://perma.cc/ZQS86MDU (“And there’s another lesson from the robber barons [on how to avoid regulation]—one that some of you and your peers have already embraced. Philanthropy can change people’s opinions and shape your legacies into the far future. In part because you do not employ as many people
as corporate giants of previous eras, it is critical to think about local initiatives that can woo public opinion around the world. Mark [Zuckerberg] hasmade the biggest strides in setting up a foundation. The rest of you could form personal or corporate foundations, too.”).
See Ved P. Nanda et al., The Rise of Stakeholder Related Risks to Large Development and Extractive Projects, 1 The Law of Transnational
Business Transactions § 1:9 (“In this way, CSR embodies more than simply corporate philanthropy. Rather, in some industries (such as theextractive industry), it has become deeply embedded in business risk mitigation strategies and has been accompanied by a widespread belief
that CSR efforts (more specifically community investment programs) are critical to obtaining a social license to operate.”); Robert C. Bird et. al.,Corporate Voluntarism and Liability for Human Rights in A Post-Kiobel World, 102 Ky. L.J. 601, 630 (2014); Jeremy S. Goldstein, CSR Best Practicefor Abolishing Child Labor in the Travel and Tourism Industry, 44 Denv. J. Int’l L. & Pol’y 475, 515 (2016); Alexandra Guáqueta, The New Social
License to Operate and the Role of Legal Advisors, 105 Am. Soc’y Int’l L. Proc. 303, 304 (2011) (“Some companies responded to these multi-faceted [sic] challenges [of operating in developing nations] by working with NGOs and states to come up with practical solutions both to prevent
negative impacts on the ground and to better manage their reputational problems.”); Henderson & Malani, supra note 73, at 578; Ashton B. Inniss,
Rethinking Political Risk Insurance: Incentives for Investor Risk Mitigation, 16 Sw. J. Int’l L. 477, 493 (2010) (“The profit motive drives corporate aid
programs.”); Lisa J. Laplante & Suzanne A. Spears, Out of the Conflict Zone: The Case for Community Consent Processes in the Extractive Sector,
11 Yale Hum. Rts. & Dev. L.J. 69, 84 (2008) (“Even if companies embraced sustainable development out of a sense of charitable philanthropy atthe outset, they will be required to make progress on the issue in order to maintain not only their social license to operate, but also their competitive advantage.”); Thomas P. Lyon & John W. Maxwell, Corporate Social Responsibility and the Environment: A Theoretical Perspective, 2 Rev.
Envtl. Econ. & Pol’y 240, 245 (2008); Ibironke T. Odumosu-Ayanu, Foreign Direct Investment Catalysts in West Africa: Interactions with Local
Content Laws and Industry-Community Agreements, 35 N.C. Cent. L. Rev. 65, 82 (2012) (“[Community development agreements] are strategic
community investment initiatives fostering social licenses to operate in host communities.”); Political Risk Insurance: Is it Necessary? § 5, Practical
Law Practice Note 5-503-9151 (2017); Rachael E. Salcido, Enduring Optimism: Examining the Rig-to-Reef Bargain, 32 Ecology L.Q. 863 (2005);
Gare A. Smith, An Introduction to Corporate Social Responsibility in the Extractive Industries, 11 Yale Hum. Rts. & Dev. L.J. 1, 4 (2008) (“[E]ffective
and meaningful CSR policies are increasingly regarded as a necessary prerequisite to securing a social license to operate . . .”); cf. David P. Baron,
Private Politics, Corporate Social Responsibility, and Integrated Strategy, 10 J. Econ. & Mgmt. Strategy 7, 44 (2001) (“Firms that are sensitive to
how such [activist] groups might evaluate their practices and whether those groups are likely to act on that evaluation may proactively change theirpractices to avoid even the threat of becoming the target of an activist.”); Neil Gunningham et al., Social License and Environmental Protection:
Why Businesses Go Beyond Compliance, 29 Law & Soc. Inquiry 307 (2004) (describing the “social license to operate”).
Cf. Nanda et al., supra note 81, § 1:9; Odumosu-Ayanu, supra note 81, at 82.
Reasonable definiteness of essential terms is generally necessary for a binding contract. See generally Restatement (Second) of Contracts §33 (Am. Law Inst. 1981).
See supra §§ I(B)(1)(i)–(ii).
See supra § I(B)(1).
See, e.g., R.G. Grp., Inc. v. Horn & Hardart Co., 751 F.2d 69, 75–76 (2d Cir. 1984) (applying New York law).
See infra § II(B).
A number of studies have suggested that increasing the corporate tax rate in a country tends to decrease the rate of investment by corporations,
see Jonathan Lewellen & Katharina Lewellen, Investment and Cash Flow: New Evidence, 51 J. Fin. & Quant. Analysis 1135 (2016), https://perma.
cc/XXS4-F92H; Eric Ohrn, The Effect of Corporate Taxation on Investment and Financial Policy: Evidence from the DPAD, 10 Am. Econ. J.: Econ.
Pol’y 272 (2018), https://perma.cc/SA22-Q98T; Simeon Djankov et al., The Effect Of Corporate Taxes On Investment And Entrepreneurship (Nat’lBureau Econ. Research, Working Paper No. 13756, 2008), https://perma.cc/R7N8-6WGL, although the magnitude of the effect remains controversial. A sufficiently large decrease in the rate of investment could be expected to adversely affect the rate of economic growth. We expect theadverse effects of an increase in a signatory’s giving obligations to be similar to the adverse effects of an increase in the tax rate experienced by
the signatory.
Saudi Aramco was the most profitable company in 2018, with approximately $111 billion in profits. See Fred Imbert, Saudi Aramco made $111 billion
in 2018, topping Apple as the world’s most profitable company, CNBC (Apr. 1, 2019, 3:55 PM). 2018 GWP was $85.791 trillion. See GDP (current
US$), World Bank (2019), https://perma.cc/YQ7L-DJU6. This puts Saudi Aramco’s profits at 0.129% of GWP, placing it in the second bracket.
Apple Inc. was the second most profitable company in 2018, with approximately $59,531,000,000 in profits. See Imbert, supra note 89.
A typical company in the Fortune 500 gives approximately 1% of its pre-tax earnings. See O’Neil et al., Corporate Cash Giving Rises 5%, Exclusive
Chronicle Survey Shows, Chron. Philanthropy (Sept. 5, 2018), https://www.philanthropy.com/article/Corporate-Cash-Giving-Rises/244391.
Cf. Daniel Bunn, Corporate Tax Rates Around the World, 2018, Tax Foundation (Nov. 27, 2018), https://perma.cc/MAD4-E8H4.
However, designation of a specific, unbiased, expert body to determine GWP, see supra note 89, should ease administration of this determination.
See generally Cullen O’Keefe, Stable Agreements in Turbulent Times: A Legal Toolkit for Constrained Temporal Decision Transmission 25–27(Future of Humanity Inst. Technical Report, 2019), https://perma.cc/W894-ADVV.
See id.
See infra § V(A)(2).
2061 is the median year by which AI experts predicted that AI would outperform humans at all economically relevant tasks. See Grace et al., supranote 5, at 2.
See Real GDP Long-Term Forecast, OECD, https://perma.cc/4DZF-LBZZ (archived July 27, 2019).
This is more than Americans’ combined annual charitable giving. See Giving USA, Giving USA 2019: Americans Gave $427.71 Billion To Charity In
2018 Amid Complex Year For Charitable Giving, Giving USA (June 18, 2019, 3:07 PM), https://perma.cc/4JNC-QNJ4. It is about 10% of the 2019 US
federal budget. See Budget, Cong. Budget Office, https://perma.cc/3MCH-Y4SJ (archived July 27, 2019).
See supra note 91.
The current US federal corporate income tax rate is 21%. See I.R.S., I.R.S. Publ’n 542, at 16 (2019), https://perma.cc/8UP5-XXB2.
See infra § V(B)(1).
See Contingent Convertible (CoCo), in A Dictionary Of Finance And Banking (Jonathan Law ed., 5th ed. 2014) (ebook). For tax purposes, CoCosare part of a class of assets known as “contingent payment debt instruments (CDPIs)”. See Robert Willens, Cuckoo for Coco Puffs?, CFO (May 22,2002), https://perma.cc/B6B8-K49K.
A CoCo Windfall Clause that would give a controlling stake to bondholders in case of a windfall would probably be subject to enhanced scrutiny
under Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986). Revlon requires that, in “every case in which a fundamental
change of corporate control occurs or is contemplated,” the board must attempt to maximize sale price. See Barkan v. Amsted Indus., Inc., 567
A.2d 1279, 1286–88 (Del. 1989). This leaves the firm with two options. If they wish to transfer control to a single bondholder in case of a Windfall,

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they must engage in a process that satisfies the Revlon duties. Cf. id. Alternatively, they can give bondholders a minority stake and thereby avoid
invoking Revlon. Cf id.
If the corporation already has a controlling shareholder, however, then the “controlling stockholder is free to consider its interests alone inweighing the decision to sell its shares or, having made such a decision, evaluating the adequacy of a given price.” In re Delphi Fin. Grp. S’holder
Litig., No. CIV.A. 7144-VCG, 2012 WL 729232, at *15 (Del. Ch. Mar. 6, 2012); see also Abraham v. Emerson Radio Corp., 901 A.2d 751, 753 (Del. Ch.
2006) (“Under Delaware law, a controller remains free to sell its stock for a premium not shared with the other stockholders except in very narrowcircumstances.”); In Re: Sea-Land Corp. Shareholders Litig., No. CIV. A. 8453, 13 Del. J. Corp. L. 795, 804 (Del. Ch. May 22, 1987). These cases are
not exactly analogous since the contemplated transaction is not truly a sale of control but rather a contingent shift of control. Nevertheless, the underlying principles should be the same: in either case, the controlling shareholder causes control to shift from herself to another entity, so minority
shareholders do not lose the opportunity to extract a control premium. I do not know of any cases on point, however.
There is, however, an important exception to a controlling shareholder’s freedom to sell: a controller cannot sell to someone she suspects “[i]seither a looter or [i]s dishonest and ha[s] improper plans for [the corporation].” See Abraham, 901 A.2d at 759. A charity-bondholder would likely
be considered such a “looter” if it plans to take assets out of the corporation. In any case, once bondholders became controllers, they would owe
fiduciary duties to minority shareholders. Controlling bondholders could, however, force the corporation to pay out dividends so long as it shares
those dividends pro rata with minority shareholders. See Sinclair Oil Corp. v. Levien, 280 A.2d 717, 721–22 (Del. 1971).
A final complication with a CoCo Windfall Clause that gives bondholders a majority stake is that a minority shareholder could rightly argue that,
because of a control premium, the value of the majority stake is greater than the pro rata value of the minority stakes distributed in the pre-Clausemarket test.
Of course, a Windfall Clause could easily avoid these messy implications by paying contingent/index-linked coupons to bondholders or contingently converting bonds into nonvoting equity.
See generally Greg Brockman et al., OpenAI LP, OpenAI: Blog (Mar. 11, 2019), https://perma.cc/9LDZ-CPX8.
For transparency, we note that OpenAI employs lead author Cullen O’Keefe.
See supra § I(B).
We borrow this goal from principles of the Effective Altruism community. See generally Centre for Effective Altruism, Effective Altruism
Handbook (2d ed. n.d.), https://perma.cc/Z8JQ-4S26; William MacAskill, Doing Good Better (2015); Peter Singer, The Life You Can Save(2009). One organization that applies these principles is the Open Philanthropy Project, see generally Open Philanthropy Project, https://www.
openphilanthropy.org/ (last visited Jan. 6, 2019). Their mission is “to give as effectively as [they] can . . .” Mission & Values, Open Philanthropy
Project, https://perma.cc/Y8UE-QYHV (archived Jan. 6, 2019). We hope that research of this and other organizations involved in Effective Altruism
will aid in the design of a windfall distribution plan.
For transparency, we note that the Open Philanthropy Project has funded the publishers of this Report: the Future of Humanity Institute and theBerkeley Existential Risk Initiative. The publishers of this Report are also members of the wider Effective Altruism community.
See The Wrong Donation Can Accomplish Nothing, GiveWell, https://perma.cc/E7LG-FWNQ (archived June 4, 2019); Your Dollar Goes Further
When You Fund the Right Program, GiveWell, https://perma.cc/XUG7-5V6U (archived June 4, 2019).
See Toby Ord, The Moral Imperative toward Cost-Effectiveness in Global Health, Ctr. for Global Dev. (Mar. 2013), https://perma.cc/63W6-ZZRJ(“In many cases, ignoring cost-effectiveness . . . means losing almost all the value that we could create. Thus there is a moral imperative to fund themost cost-effective interventions.”).
See supra § I(B).
Cf. supra § I(B)(1)(ii).
See also Jon Elster, Securities Against Misrule (2013).
Cf. Reasoning Transparency, Open Philanthropy Project (Dec. 2017), https://perma.cc/HLQ5-AE37.
See What is the Four-eyes Principle?, United Nations Indus. Dev. Org., https://perma.cc/BW3U-AY3G (archived Jan. 14, 2019).
Several US agencies have such whistleblower rewards programs in place. See generally Jason Zuckerman & Matthew Stock, What is a Whistleblower Reward?, Zuckerman Law (June 12, 2019), https://perma.cc/KL2J-2938.
See, e.g., Robert H. Sitkoff & Jesse Dukeminier, Wills, Trusts, and Estates 587–693 (10th ed. 2017).
See, e.g., Global Impact Investing Network, Impact-Based Incentive Structures (2011), https://perma.cc/VY9X-HXMC.
See, e.g., Geoffrey A. Manne, Agency Costs and the Oversight of Charitable Organizations, 1999 Wis. L. Rev. 227.
For example, there are existing proposals to use AI to advance the United Nations’ Sustainable Development Goals. See, e.g., U.N. Secretary-General, Strategy on New Technologies (2018), https://perma.cc/VXY5-PEJU; AI for Good Global Summit, supra note 56; Declan Butler, AI Summit Aims
to Help World’s Poorest, Nature: News (June 6, 2017), https://perma.cc/5QTN-4YT8; Michael Chui et al., Notes from the AI Frontier: Applying AI forSocial Good, McKinsey Global Inst. (2018), https://perma.cc/3D9R-L8MG.
For the importance of China in global AI development, see generally Ding, supra note 55.
Cayman Islands company law might also be important, since several major Chinese AI firms are incorporated there. See Alibaba Grp. Holding
Ltd., Annual Report (Form 20-F) (July 27, 2018), https://perma.cc/Q6GQ-3BU8; Baidu, Inc., Annual Report (Form 20-F) (Mar. 15, 2019), https://perma.
cc/M8Y9-K63Z; Tencent Holdings Ltd., 2018 Interim Report (2018), https://perma.cc/V8SM-K4KP. Although we are not aware of any decisions
directly on-point, relevant Caymanian company law appears broadly similar to Delaware’s. Cf. Douglas Freeman, New Frontiers for Asia M&A: Strategies in the Cayman Islands for Asia-Based Companies, 2014 WL 4160103, at *3 (“[U]nder Cayman Islands law, directors must act bona fide and inwhat they consider to be the best interests of the company. Directors are considered in breach of their fiduciary duties if the court concludes thatno reasonable director would have found the director’s decision to be in the best interest of the company. In making its assessment, the court will
not be concerned with the merits of the contested director decision from a commercial standpoint. . . . While this regime bears resemblance to thebusiness judgment rule in Delaware, the standard of care, in practice, may be easier for a director to satisfy.”). So, the Windfall Clause should bepermissible for Caymanian companies too.
Jill E. Fisch, Questioning Philanthropy from A Corporate Governance Perspective, 41 N.Y.L. Sch. L. Rev. 1091, 1096 (1997).
Id. at 1094 (citing Kahn v. Sullivan, 594 A.2d 48, 61 (Del. 1991); Theodora Holding Corp. v. Henderson, 257 A.2d 398, 405 (Del. Ch. 1969); A.P. Smith
Mfg. Co. v. Barlow, 98 A.2d 581, 590 (N.J. 1953)).
“A director or officer who makes a business judgment in good faith fulfills the duty [of care] if the director or officer: (1) is not interested . . . inthe subject of the business judgment; (2) is informed with respect to the subject of the business judgment to the extent the director or officer
reasonably believes to be appropriate under the circumstances; and (3) rationally believes that the business judgment is in the best interests of thecorporation.” Principles of Corp. Governance § 4.01(a) (Am. Law Inst. 1994).
See Kahn, 594 A.2d at 61 (quoting Theodora, 257 A.2d at 405).
See id. (quoting Theodora, 257 A.2d at 405).
I.R.C. § 170(a)(1).
See id. § 170(b)(2)(A).
No. CIV. A. 10823, 16 Del. J. Corp. L. 1621 (Del. Ch. Aug. 7, 1990), aff’d sub nom. Kahn, 594 A.2d 48.
See Appellant’s Statement in Lieu of Reply Brief, Kahn, 594 A.2d 48 (No. 312, 1990), 1990 WL 10090250, at *45.
See Opening Brief of Objector Below-Appellant Alan R. Kahn, Kahn, 594 A.2d 48 (No. 301, 1990), 1990 WL 10090236, at *32.
See Hammer, 16 Del. J. Corp. L. at 1633.
See Kahn, 594 A.2d at 61.
See Dodge v. Ford Motor Co., 70 N.W. 668 (Mich. 1919). See generally John A. Pearce II, The Rights of Shareholders in Authorizing Corporate
Philanthropy, 60 Vill. L. Rev. 251, 253 (2015); Hayden W. Smith, If Not Corporate Philanthropy, Then What?, 41 N.Y.L. Sch. L. Rev. 757, 760–62(1997).
Kahn, 594 A.2d 48; Ella M. Kelly & Wyndham, Inc. v. Bell, 266 A.2d 878 (Del. 1970) (upholding voluntary payments to county government); Theodora, 257 A.2d 398; Shlensky v. Wrigley, 237 N.E.2d 776 (Ill. App. Ct. 1968) (upholding president’s choice not to host lucrative nighttime baseballgames, allegedly out of concern for stadium neighborhood’s welfare); Barlow, 98 A.2d 581; Union Pac. R.R. v. Trustees, Inc., 329 P.2d 398 (Utah1958). Note that of these, Barlow and Union Pacific were friendly suits. See Smith, supra note 133, at 761 n.21.
See In re KKR Fin. Holdings LLC S’holder Litig., 101 A.3d 980, 995–96 (Del. Ch. 2014); Off v. Ross, No. CIV.A. 3468-VCP, 2008 WL 5053448, at *3,*11 (Del. Ch. Nov. 26, 2008); In re Oracle Corp. Derivative Litig., 824 A.2d 917, 920, 923–24, 930–35, 940, 942 (Del. Ch. 2003).
See Se. Pennsylvania Transportation Auth. v. Volgenau, No. CV 6354-VCN, 2013 WL 4009193, at *15–16 (Del. Ch. Aug. 5, 2013).
See Barlow, 98 A.2d at 590 (upholding donation where “[t]here [wa]s no suggestion that it was made . . . to a pet charity of the corporate directors
in furtherance of personal rather than corporate ends.”); see also Theodora, 257 A.2d at 404 (quoting Barlow, 98 A.2d at 590). See generally
Jayne W. Barnard, Corporate Philanthropy, Executives’ Pet Charities and the Agency Problem, 41 N.Y.L. Sch. L. Rev. 1147 (1997).
See Khan, 594 A.2d at 61 (approving as protected by BJR corporate donation to build a museum to house CEO’s personal art collection); seealso Joseph K. Leahy, Are Corporate Super PAC Contributions Waste or Self-Dealing? A Closer Look, 79 Mo. L. Rev. 283, 366 (2014) (“Although[Theodora] and cases from outside Delaware have suggested that a plaintiff might successfully challenge donations to a director’s pet charity,
Kahn may foreclose this possibility in Delaware. The overarching concern of these commentators seems to be that donations to pet charities ought
to be deemed self-dealing. If a charity created with the sole purpose of building an entire museum dedicated to housing the CEO’s personal art
collection is not a pet charity—then what is?”).
See Frank H. Easterbrook & Daniel R. Fischel, The Economic Structure of Corporate Law 93, 98–100 (1991); Todd M. Aman, Cost-Benefit
Analysis of the Business Judgment Rule: A Critique in Light of the Financial Meltdown, 74 Alb. L. Rev. 1, 13–14 (2011); Richard A. Booth, A Minimalist
Approach to Corporation Law, 34 Ga. L. Rev. 431, 442 (2000); Melvin Aron Eisenberg, The Director’s Duty of Care in Negotiated Dispositions, 51
U. Miami L. Rev. 579, 589 (1997); Melvin Aron Eisenberg, The Divergence of Standards of Conduct and Standards of Review in Corporate Law, 62
Fordham L. Rev. 437, 444–45 (1993); Daniel R. Fischel, The Business Judgment Rule and the Trans Union Case, 40 Bus. Law. 1437, 1442 (1985);

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Daniel R. Fischel & Michael Bradley, The Role of Liability Rules and the Derivative Suit in Corporate Law: A Theoretical and Empirical Analysis, 71
Cornell L. Rev. 261, 270 (1986); Wayne O. Hanewicz, Director Primacy, Omnicare, and the Function of Corporate Law, 71 Tenn. L. Rev. 511, 547–
49 (2004); Peter V. Letsou, Implications of Shareholder Diversification on Corporate Law and Organization: The Case of the Business Judgment
Rule, 77 Chi.-Kent L. Rev. 179 (2001); Steven L. Schwarcz & Gregory M. Sergi, Bond Defaults and the Dilemma of the Indenture Trustee, 59 Ala.
L. Rev. 1037, 1056, 1061–62 (2008); E. Norman Veasey & Christine T. Di Guglielmo, What Happened in Delaware Corporate Law and Governancefrom 1992–2004? A Retrospective on Some Key Developments, 153 U. Pa. L. Rev. 1399, 1423–24 (2005).
See Veasey & Di Guglielmo, supra note 139, at 1424.
Cf. Duncan v. Theratx, Inc., 775 A.2d 1019, 1022 (Del. 2001) (“[T]he standard remedy for breach of contract is based upon the reasonable expectations of the parties ex ante.”); In re Tyson Foods, Inc., 919 A.2d 563, 586 (Del. Ch. 2007) (“Even were plaintiffs to maintain that this payment [ofspousal benefits] constituted a pure waste of corporate assets, the relevant value for consideration would not be the ex post cost of benefits paid
to [a consultant’s wife] after her husband’s death, but the cost of the risk placed on the company at the time of the contract.”); Andaloro v. PFPCWorldwide, Inc., No. CIV.A. 20289, 2005 WL 2045640, at *9 (Del. Ch. Aug. 19, 2005) (“The [discounted cash flow] model of valuation is a standard
one that gives life to the finance principle that firms should be valued based on the expected value of their future cash flows, discounted to present value in a manner that accounts for risk.”); In re Trans World Airlines, Inc. Shareholders Litig., No. CIV.A. 9844, 1988 WL 111271, at *11 (Del. Ch.
Oct. 21, 1988) (“Surely the expected value of the debt security is a most material consideration to a shareholder.”), abrogated on other grounds by
Kahn v. Lynch Commc’n Sys., Inc., 638 A.2d 1110 (Del. 1994); Easterbrook & Fischel, supra note 139, at 98 (“A decision is good to the extent it has
a high expected value, although it may also have a high variance.”).
See infra § IV(A)(1) (giving an example of the present expected cost of a Windfall Clause).
See supra § I(B)(2).
See Smith v. Van Gorkom, 488 A.2d 858, 873 (Del. 1985), overruled on other grounds by Gantler v. Stephens, 965 A.2d 695 (Del. 2009); Aronson v.
Lewis, 473 A.2d 805, 812 (Del. 1984), overruled on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000).
For related scholarship on the BJR as a justification for engaging in CSR practices, see, e.g., Janet E. Kerr, Sustainability Meets Profitability: The
Convenient Truth of How the Business Judgment Rule Protects a Board’s Decision to Engage in Social Entrepreneurship, 29 Cardozo L. Rev. 623(2007); Sneirson, supra note 62, at 548–54.
See Facebook Inc., 2005 Officers’ Stock Plan (Nov. 8, 2005), https://perma.cc/XK6J-CUFH.
See Facebook Inc., Statement of Changes in Beneficial Ownership (Form 4) (May 21, 2012), https://perma.cc/4Q8N-SF2N.
See Facebook Inc., Statement of Changes in Beneficial Ownership (Form 4) (Dec. 20, 2013), https://perma.cc/9YLC-EGB9.
All options had an exercise price of $0.06, and Zuckerberg acquired 60 million shares in each transaction. See Facebook Inc., supra note 147;
Facebook Inc., supra note 148. Facebook’s stock was valued at $34.03/share for the 2012 transaction. See FB Historical Prices, Yahoo! Finance,
https://perma.cc/GE8A-CBKZ (archived Feb. 7, 2019). Thus, in the 2012 transaction, Zuckerberg paid $3.6 million for $2.0418 billion in stock, fora net pre-tax gain of $2.0382 billion. Facebook’s stock was valued at $55.12/share for the 2013 transaction. See FB Historical Prices, Yahoo! Finance, https://perma.cc/JJJ5-VM46 (archived Feb. 7, 2019). Thus, in the 2012 transaction, Zuckerberg paid $3.6 million for $3.3072 billion in stock,
for a net pre-tax gain of $3.3036 billion.
See Dealbook, Tracking Facebook’s Valuation, N.Y. Times: Dealbook (Feb. 1, 2012), https://perma.cc/8AHE-FHM8.
In fact, the stock options technically had a fair market value of zero at the time they were issued, since the exercise price was equivalent to the fairmarket value of the shares. See Facebook Inc., supra note 146.
Zhōnghuá Rénmín Gònghéguó Gōngsī Fǎ (中华人民共和国公司法) [Company Law of the People’s Republic of China] (promulgated by Standing
Comm. Nat’l People’s Cong., Dec. 28, 2013, effective Mar. 1, 2014) [hereinafter Company Law], art. 5.
Virginia Harper Ho, Beyond Regulation: A Comparative Look at State-Centric Corporate Social Responsibility and the Law in China, 46 Vand. J.
Transnat’l L. 375, 399 (2013) (footnotes omitted); see also Afra Afsharipour & Shruti Rana, The Emergence of New Corporate Social Responsibility Regimes in China and India, 14 U.C. Davis Bus. L.J. 175, 199–200 (2014).
See Ho, supra note 153, at 400.
Company Law art. 5.
See, e.g., Jessica Marie Conrad, The Business of Business: Comparing Corporate Social Responsibility Initiatives in China and the United States, 41
Ga. J. Int’l & Comp. L. 747, 753 (2013); cf. Shen Wei, Corporate Law in China 91 (2015) (“The current regulatory approach [for CSR in China] is still
to rely on corporate conscience.”).
Wei, supra note 156, at 89; see also id. at 90–91.
Ho, supra note 153, at 409.
See id. at 418.
See id.; cf. OECD, China-OECD Project on Government Approaches to Encouraging Responsible Business Conduct ¶ 78 (2008), https://perma.cc/RP2M-X5KU (“Corporate philanthropy is not a substitute for [CSR]. In some cases, it is used as a mere public relations tool, giving ‘face’to enterprises and their leaders. When this is done to divert attention from irresponsible conduct, negative consequences may counteract anysocial benefit. Internationally-recognised standards of corporate conduct such as the OECD Guidelines for Multinational Enterprises and the Ten
Principles of the UN Global Compact do not include sections explicitly endorsing charitable giving as a form of responsible business conduct.”).
Zhōnghuá Rénmín Gònghéguó Císhàn Fǎ (中华人民共和国慈善法) [Charity Law of the People’s Republic of China] (promulgated by Nat’l People’s
Cong. Mar. 16, 2016, effective Sept. 1, 2016).
See id. art. 80.
In response to a general complaint that businesses that make large charitable donations do not receive enough tax concessions, the government
waived the tax on the donations made from company profits, for amounts that constitute up to 12% of the profits. Under the new Law, if the donation exceeds 12% annually, the balance can be deducted from the taxable income over the following few years.
Wendy Zeldin, China: Charity Law Adopted, Libr. Cong.: Global Legal Monitor (May 17, 2016) (citation omitted), https://perma.cc/W3GR-KHK7.
Note that this is more generous than the American tax deduction, which is capped at 10% annually. See supra § III(A)(1).
See Ho, supra note 153, at 413.
Id. at 416.
See supra § II(A)(3).
See James R. Hitchner, Financial Valuation: Applications and Models 138-40, 190-92 (4th ed. 2016); Aswath Damodaran, Cost of Capital by
Sector (US) (Jan. 2019), Damodaran Online, https://perma.cc/EGN9-LN5W.
See Caroline Preston, The 20 Most Generous Companies of the Fortune 500, Fortune (June 22, 2016), https://perma.cc/L2SM-8W2K.
See CPI Inflation Calculator, Bureau of Labor Statistics, https://perma.cc/4QRE-JAQA (archived Aug. 3, 2019).
See Preston, supra note 167.
See, e.g., Christopher May, Who’s in Charge? Corporations as Institutions of Global Governance, 1 Palgrave Comm. 15042 (2015).
See generally Responsible Bus. Alliance, http://www.responsiblebusiness.org/ (last visited Mar. 12, 2019).
See Jonathan E. Helmreich, Gathering Rare Ores 74 (1986).
See id. at 74–77.
The original sum of 100 million Belgian francs, see id. at 75, is worth between 22 million and 109 million 2015 US dollars (depending on use ofgoods or labor equivalence). See Rodney Edvinsson, Historical Currency Converter (Test Version 1.0), Historical Statistics (Jan. 10, 2016), https://perma.cc/TV7N-RQNZ (archived Mar. 12, 2019).
See Helmreich, supra note 172, at 75.
See id. This worry would be diminished today due to widespread accessibility of public companies’ financial statements.
See Vogel, supra note 65, at 18.
See Michael Bloom, Doing Good Well, Fed. Trade Comm’n: Blog (Oct. 20, 2015, 3:38 PM), https://perma.cc/9NUZ-C8WF.
See Aseem Prakash & Matthew Potoski, The Voluntary Environmentalists 46–53 (2006); David Vogel, The Private Regulation of Global
Corporate Conduct, in The Politics of Global Regulation 151, 164–71 (Walter Mattli & Ngaire Woods eds., 2009).
FSC, https://us.fsc.org/en-us (last visited Nov. 6, 2019).
Rainforest Alliance, https://www.rainforest-alliance.org/ (last visited Nov. 6, 2019).
Fair Trade Certified, https://www.fairtradecertified.org/ (last visited Nov. 6, 2019).
(RED), https://www.red.org/ (last visited Nov. 6, 2019).
See generally Total Giving, Newman’s Own Foundation, http://newmansownfoundation.org/about-us/total-giving/ (last visited Nov. 6, 2019).
Prominent examples include Ikea, Carlsberg, Novo Nordisk, Maersk, and Indian conglomerate Tata. See Henry Hansmann, The Governance ofFoundation-Owned Firms 4–7 (2018) (unpublished manuscript), https://perma.cc/X2E4-P4QR.
For example, Carlsberg uses funds to support basic research and Danish national causes. See Anders Garrigues, The Carlsberg Foundation Revenue and Distribution of Funds, Carlsberg Foundation, https://perma.cc/3MVV-6SDB (last visited Nov. 6, 2019).
Google Inc., Registration Statement vi (Form S-1) (Apr. 29, 2004), https://perma.cc/XAR3-CJ5N.
See Associated Press, Google Commits $1 Billion to Charity, Bos. Globe (Oct. 12, 2005), https://perma.cc/VCS5-BCNN.
More accurately, OpenAI is now two legal entities: a nonprofit (“OpenAI Nonprofit”) and a capped-profit limited partnership (“OpenAI LP”). See generally Brockman et al., supra note 104. LP profits above a predetermined cap on investor returns will be donated to the OpenAI Nonprofit—hence“capped profit.” See id.
See id. Mechanisms meant to ensure fidelity to that humanitarian mission include: binding the LP to first promote OpenAI’s broad humanitarian
mission, even if it requires foregoing profits; having the Nonprofit’s board manage the LP; requiring that board to have a majority of disinterested
members; and excluding financially interested board members from decisions where the humanitarian and profit motives might conflict, such asdecisions on payouts to investors and employees. See id.

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See Top 86 Largest Sovereign Wealth Fund Rankings by Total Assets, SWFI, https://perma.cc/5FP4-YAZ7 (archived Nov. 6, 2019).
See, e.g., John M. Hartwick, Intergenerational Equity and the Investing of Rents from Exhaustible Resources, 67 Am. Econ. Rev. 972 (1977); Anthony Venables & Samuel Wills, Resource Funds: Stabilization, Parking and Intergenerational Transfer, Brookings (Sept. 18, 2015), https://perma.cc/
LEH5-E97C.
About the Fund, Norges Bank Inv. Mgmt., https://perma.cc/GZL7-PMHD (archived Nov. 6, 2019).
We consider a sort of sovereign wealth fund for AI as an alternative to the Windfall Clause infra § V(D)(3).
See Martin J. Greenberg & Michael R. Gavin, The Windfall Clause, Law Offices of Martin J. Greenberg (Nov. 1, 2016), https://perma.cc/7G2WB8B8.
See, e.g., Dhammika Dharmapala & Vikramaditya Khanna, The Impact of Mandated Corporate Social Responsibility: Evidence from India’s Companies Act of 2013, 56 Intl. Rev. L. & Econ. 92 (2018).
See generally Sanford V. Berg & John Tschirhart, Natural Monopoly Regulation (1988).
See, e.g., John Thornhill, Why Facebook Should Pay Us A Basic Income, Financial Times: Opinion (Aug. 7, 2017) (“[Mark Zuckerberg] should now
live up to his rhetoric [about wealth redistribution] and launch a Facebook Permanent Fund to cover a broader universal basic income experiment.
He should encourage other data businesses, such as Google, to contribute too.”); Felix Salmon, Takeaway from the New Billionaires Ranking:
Zuckerberg and Bezos Don’t Give Away Enough Money, Slate (July 8, 2018).
The Giving Pledge, https://givingpledge.org/ (last visited Nov. 6, 2019).
Founders Pledge, https://founderspledge.com/ (last visited Mar. 13, 2019).
But see infra § V(C)(2) (restating and responding to arguments that analogizing very profitable companies to wealthy individuals is inappropriate).
See Christian Kellner et al., Ex-ante Commitments To “Give If You Win” Exceed Donations After A Win, 169 J. Pub. Econ. 109 (2019).
See Joan Luft & Michael D. Shields, Psychology Models of Management Accounting (2010); Herbert A. Simon, Rational Decision Making in
Business Organization, 69 Am. Econ. Rev. 493 (1979); John D. Sterman, Modeling Managerial Behavior: Misperceptions of Feedback in a Dynamic
Decision Making Experiment, 35 Mgmt. Sci. 321 (1989).
Proposed alternatives not considered at-length here include, e.g., a value-added tax on technology services, see Rifkin, supra note 6, at 270,a negative income tax, see infra note 288, and paying individuals more for providing data for AI, see Eric A. Posner & E. Glen Weyl, Radical
Markets 205–49 (2018). This is surely not an exhaustive list.
See Belfield, supra note 35, at 3–4.
See id.
See generally Michelle Clark Neely & Larry D. Sherrer, A Look at Corporate Inversions, Inside and Out, Regional Economist, first quarter 2017, at
1.
Cf. Practical Law Bankruptcy & Restructuring and Practical Law Finance, Fraudulent Conveyances: Issues and Strategies for Lenders and Private
Equity Sponsors, Practical Law Practice Note 8-382-2478 § 1 (2019) (discussing “downstream guarant[ies]”—where “the parent guarantees
the debt of its subsidiary.”). Some contracts contain similar “upstream” guaranties (i.e., a subsidiary guaranteeing the debts of its parent) and“cross-stream” guaranties (i.e., a subsidiary guaranteeing the debts of its sibling corporation). See id. However, such guarantees are more difficult
to enforce given the guarantor’s lack of control over the debtor. See id. Beyond these specific guarantees, other contractual protections—basedon common corporate creditor protections—are possible. See generally id.; Practical Law Finance, Loan Agreement: Affirmative Covenants,
Practical Law Practice Note 6-382-8184 (2019); Practical Law Finance, Loan Agreement: Negative Covenants, Practical Law Practice Note
5-383-3077 (2019).
See Fin. Accounting Standards Bd., Statement of Financial Accounting Standards No. 94 (1987), https://www.fasb.org/jsp/FASB/Document_C/DocumentPage?cid=1218220128231.
See generally Unif. Voidable Transactions Act § 4(a) (Unif. Law Comm’n 2014) (“A transfer made or obligation incurred by a debtor is voidable
as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made thetransfer or incurred the obligation: (1) with actual intent to hinder, delay, or defraud any creditor of the debtor; or (2) without receiving a reasonably
equivalent value in exchange for the transfer or obligation, and the debtor: (i) was engaged or was about to engage in a business or a transaction
for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (ii) intended to incur, or believedor reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.”). Note that, under
the Uniform Voidable Transactions Act, transfer to an affiliated corporation (such as a parent, subsidiary, or sibling) may be suggestive of actual
intent to defraud the creditor. See id. § 4(b).
See generally Restatement (Second) of Contracts § 205 (Am. Law Inst. 1981) (“Every contract imposes upon each party a duty of good faithand fair dealing in its performance and its enforcement.”).
See DGCL §§ 170(a)(1), 173.
“[DGCL § 170] contains a narrow exception under which a corporation that does not have surplus may pay a dividend out of ‘net profits’ for the
fiscal year in which the dividend is declared and the prior year. These so-called ‘nimble dividends’ are rarely paid.” James D. Honaker & Eric S.
Klinger-Wilensky, Dividends, Redemptions, and Stock Purchases, Practical Law Practice Note 1-519-2507 § 2 (2019). Nevertheless, this mightprovide a means to circumvent the Clause if unaddressed. The Clause should explicitly guard against circumvention by nimble dividends, perhaps
by contractually specifying that a signatory must satisfy its Clause obligations before paying nimble dividends. Furthermore, use of nimble dividends to circumvent Clause obligations could trigger fraudulent conveyance liability. See id.
“‘Surplus’ is defined in [DGCL § 154] as, ‘[t]he excess, if any, at any given time, of the net assets of the corporation over the amount . . . determined
to be capital.’ ‘Net assets’ is defined by [DGCL § 154] to mean ‘the amount by which total assets exceed total liabilities.’ This definition of net assets
is essentially a balance sheet test.” Id.; see also 11 Fletcher Cyc. Corp. § 5340 (2018) (“The duty of a corporation to pay its debts is superior to
the duty to pay dividends. Courts have generally held that indebtedness must be deducted as a liability in determining compliance with statutory
equity insolvency and balance sheet limitations for the payment of dividends.” (footnotes omitted)). See generally Richard A. Booth, Financing
the Corporation § 5:12 (2018).
See supra § I(B)(2)(iii).
See supra § I(B)(1)(ii).
See supra § I(B)(1)(i).
See, e.g., Brin, supra note 6.
Asilomar AI Principles, supra note 6.
See id.
See supra § I(B).
See supra § IV(A)(1).
See supra § I(B)(1)(iii).
See supra § I(B)(1)(iv).
White-collar workers are more likely to report that they feel “‘positive’ or ‘mostly positive’ about the impact of [AI] on people’s lives and work overthe next 10 years” than blue-collar workers. Northeastern U. & Gallup, supra note 26, at 24. They also feel more prepared to find a new job ifthey lose theirs to AI. See id. at 25. A similar gap in both optimism and perceived preparedness exists between college-educated and non-college
educated Americans. See id. at 26–27.
Zhang and Dafoe found similar results: groups that show greater support development of AI capable of displacing almost all human labor (high-income Americans, men, and Americans with tech experience) tend to be better positioned than their counterparts. See Baobao Zhang & Allan
Dafoe, Artificial Intelligence: American Attitudes and Trends 36–37 (2019), https://perma.cc/X3G6-3NN4.
See supra § IV(A)(1).
See Hilary Greaves, Discounting Future Health, in Global Health Priority-Setting: Cost-Effectiveness and Beyond (Ole Frithjof Norheim et al.
eds, forthcoming), https://perma.cc/F9YG-4J99.
See supra § II(A).
But see Robert E. Hall & Susan E. Woodward, The Incentives to Start New Companies: Evidence from Venture Capital 19 tbl.4 (Nat’l Bureau Econ.
Research, Working Paper No. 13056, Apr. 2007), https://perma.cc/KUK8-Y5RQ; Seth Levine, Venture Outcomes are Even More Skewed Than You
Think, VCAdventure (Aug. 12, 2014), https://perma.cc/Q4CQ-972G; Jerry Neumann, Power Laws in Venture, Reaction Wheel (June 25, 2015),
https://perma.cc/P662-74EJ.
See supra § II(A)(2).
Furthermore, there is some evidence that we could increase the personal income tax rate at the highest brackets without seriously adversely
affecting economic growth. See generally Brynjolfsson & McAfee, supra note 6, at 227.
See supra §§ I(B)(2), III(A).
See supra § I(B)(2)(i).
See supra § I(B)(2)(ii).
See supra § I(B)(2)(iii).
See, e.g., Bostrom, supra note 8; Miles Brundage et al., The Malicious Use of Artificial Intelligence (2018), https://perma.cc/JZ4Y-PA7L;
Potential Risks from Advanced Artificial Intelligence, Open Philanthropy Project (Aug. 2015), https://perma.cc/NV54-CDWK.
See Bostrom et al., supra note 11, at 9; cf. Sebastian Farquhar et al., Pricing Externalities to Balance Public Risks and Benefits of Research, 15
Health Sec. 401 (2017), https://perma.cc/WUK3-554K (proposing internalization of risks from biotechnology research).
For background on racing dynamics in AI development, see Stephen Cave & Seán Ó hÉigeartaigh, An AI Race for Strategic Advantage: Rhetoricand Risks, 2018 Proc. of the AAAI/ACM Conf. on AI, Ethics, & Soc’y 36, https://doi.org/10.1145/3278721.3278780; Edward Moore Geist, It’s
Already Too Late to Stop the AI Arms Race—We Must Manage It Instead, 72 Bulletin of the Atomic Scientists 318 (2016); The Anh Han et al.,

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Modelling and Influencing the AI Bidding War: A Research Agenda, 2019 Proc. of the AAAI/ACM Conf. on AI, Ethics, & Soc’y 5; Peter Apps,
Commentary: Are China, Russia Winning the AI Arms Race?, Reuters (Jan. 15, 2019, 6:06 AM), https://perma.cc/RN9M-XFJQ; Autonomous Weapons: An Open Letter From AI & Robotics Researchers, Future of Life Inst., https://perma.cc/7Z6E-89NR (archived Aug. 28, 2019); Julian E. Barnes& Josh Chin, The New Arms Race in AI, Wall St. J. (Mar. 2, 2018, 11:47 AM); Paul Scharre, Killer Apps, Foreign Affairs, May/June 2019; Stuart Armstrong et al., Racing to the Precipice: A Model of Artificial Intelligence Development (Future of Humanity Inst., Technical Rept. No. 2013-1), https://perma.cc/S56B-Z5UZ; Amanda Askell et al., The Role of Cooperation in Responsible AI Development (July 10, 2019) (unpublished manuscript),https://perma.cc/WYR4-LM96; OpenAI Charter, OpenAI (Apr. 9, 2018), https://perma.cc/J29Y-2PU8.
For criticism of the AI arms race narrative, see, e.g., Heather M. Roff, The Frame Problem: The AI “Arms Race” Isn’t One, 75 Bulletin of the Atomic Scientists 95 (2019); Justin Sherman, Stop Calling Artificial Intelligence Research an ‘Arms Race’, Wash. Post (Mar. 6, 2019), https://perma.cc/
X8S2-M7HR?type=image; Remco Zwetsloot et al., Beyond the AI Arms Race, Foreign Affairs (Nov. 16, 2018).
Belfield, supra note 35, at 2.
See id. at 5.
See id.
See id. at 6.
See generally supra § III(A).
See, e.g., Jobin et al., supra note 7; Asilomar AI Principles, supra note 6; Brin, supra note 6; Catherine Clifford, Billionaire Bill Gates on the Impactof A.I.: ‘Certainly’ We Can Look Forward to Longer Vacations, CNBC (Jan. 29, 2018, 1:25 PM), https://perma.cc/AQ5L-A9M3; Open Letter: ResearchPriorities for Robust and Beneficial Artificial Intelligence, Future of Life Inst., https://perma.cc/7SRX-NY3Y (archived Sept. 30, 2019).
For example, politicians of both main American political parties frequently talk about wanting to support the development of large companies. See,e.g., Lisa Mascaro, JOBS Bill Clears Congress Despite Warnings, L.A. Times (Mar. 27, 2012), https://perma.cc/MEZ7-NWYT (“Rep. Spencer Bachus(R-Ala.), the chairman of the Financial Services Committee, . . . said the legislation could help foster the next Google or Amazon.com.”); Jobs &The Economy, Scott Peters for Congress (2018), https://perma.cc/WCR6-EQEP (“We want the next Google or Qualcomm or the next medical
breakthrough to happen in [our district] . . . .”). But cf. Astead W. Herndon, Elizabeth Warren Proposes Breaking Up Tech Giants Like Amazon andFacebook, N.Y. Times (Mar. 8, 2019), https://perma.cc/8C42-8LGD. This suggests that many politicians want to be supportive of the development ofsuch large companies, perhaps conditional on those companies acting responsibly. The Clause accomplishes exactly this.
See generally Uzma Khan & Ravi Dhar, Licensing Effect in Consumer Choice, 43 J. Marketing Res. 259 (2006); Anna C. Merritt et al., Moral
Self-Licensing: When Being Good Frees Us to Be Bad, 4 Soc. & Personality Psychol. Compass 344 (2010); Benoît Monin & Dale T. Miller, Moral
Credentials and the Expression of Prejudice, 81 J. Personality & Soc. Psychol. 33 (2001); Sonya Sachdeva et al., Sinning Saints and Saintly
Sinners: The Paradox of Moral Self-Regulation, 20 Psychol. Sci. 523 (2009).
This resemblance is also why the Clause will not harm consumers through higher prices—corporate income taxes are ultimately paid by shareholders and (to a lesser degree) labor, not consumers. See, e.g., Richard Goode, The Corporate Income Tax and the Price Level, 35 Am. Econ.
Rev. 40 (1945); Juan Carlos Suárez Serrato & Owen Zidar, Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with
Heterogeneous Firms, 106 Am. Econ. Rev. 2582 (2016); Bruce Bartlett, Who Pays the Corporate Income Tax, N.Y. Times: Economix (Feb. 19, 2013),
https://perma.cc/6YYC-MLRB.
See, e.g., Megan McArdle, Here’s a Good Corporate Tax Rate: Zero, Wash. Post: Post Partisan (July 31, 2018), https://perma.cc/23PS-THAH; seealso Robert E. Lucas, Jr., Supply-Side Economics: An Analytical Review, 42 Oxford Econ. Papers 293 (1990).
See McArdle, supra note 248.
See id.
See supra note 247.
See Belfield, supra note 35, at 4; cf. David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age (2017); Anand Giridharadas, Winners Take All: The Elite Charade of Changing the World (2018); Sachs & Kotlikoff, supra note 6; Ryan Pevnick, Philanthropy
and Democratic Ideals, in Philanthropy in Democratic Societies 226 (Rob Reich et al. ed., 2016); Ed Burmila, Jeff Bezos, Amazon and Why‘Charity’ Is the Wrong Solution, Rolling Stone (Feb. 14, 2018), https://perma.cc/KS5V-LTA7; Annie Lowrey, Jeff Bezos’s $150 Billion Fortune Is a
Policy Failure, Atlantic (Aug. 1, 2018), https://perma.cc/GSD5-MLWW; Rob Reich, What Are Foundations For?, Bos. Rev.: Forum (Mar. 1, 2013),
https://perma.cc/9HB8-26V9.
See generally supra note 252 (collecting sources).
See supra § I(B)(2).
Indeed, large companies sometimes lobby heavily against taxation efforts. See, e.g., Maya Kosoff, Amazon Crushes a Small Tax That Would Have
Helped The Homeless, Vanity Fair (June 12, 2018), https://perma.cc/T8KP-NDC8.
See Your Dollar Goes Further Overseas, GiveWell, https://perma.cc/GNP3-4RHJ (archived Apr. 16, 2019).
See Curt Tarnoff & Marian L. Lawson, Cong. Res. Serv., R40213, Foreign Aid: An Introduction To U.S. Programs And Policy 18 (2018),
https://perma.cc/245Z-GHJ4 (foreign aid spending accounted for 1.2% of the US’s 2016 budget).
Cf. MacAskill, supra note 106, at 62 (“In the United States, public health experts regard any program that provides one [quality-adjusted life year
(QALY)] for less than $50,000 as a good value, and health programs will often be funded even if the cost per QALY is much higher than $50,000. In
contrast, providing the same benefit in poor countries [through philanthropy] can cost as little as one hundred dollars.”).
Cf. Max Roser, Global Income Inequality, Our World in Data § I(4) (Oct. 2016), https://perma.cc/BX5Y-74BZ (“[T]he inequality of incomes between
different countries is much higher than the inequality within countries.”).
Despite the fact that it is much cheaper to save or improve lives in the developing world, see id.; see also Your Dollar Goes Further Overseas,
GiveWell: Giving 101, https://perma.cc/GNP3-4RHJ (archived Apr. 16, 2019), the US spends very little of its budget on humanitarian foreign aid, seeTarnoff & Lawson, supra note 257, at 18.
See Belfield, supra note 35, at 4–5.
See id. at 4.
Accord id. at 4–5.
Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004); see also United States v. Grinnell Corp., 384 U.S. 563,
570–71 (1966) (“The offense of monopol[ization] . . . has two elements: (1) the possession of monopoly power in the relevant market and (2) the
willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, businessacumen, or historic accident.”).
This current state of law is being contested. See, e.g., Khan, supra note 77; Herndon, supra note 245.
See supra § I(B)(1)(ii).
See Belfield, supra note 35, at 4–5.
See supra note 35.
See supra note 35 (explaining how an AI monopoly would cause both deadweight loss and transfer of consumer surplus to producers, and how
the Windfall Clause would address the latter but not the former).
E-mail from Anthony Aguirre, Associate Professor of Physics, Univ. of Cal., Santa Cruz, to Allan Dafoe, Director, Ctr. for the Governance of AI,
Future of Humanity Inst., Univ. of Oxford (Jan. 8, 2019, 15:47 EST) (on file with author). Similar proposals can be found in Brynjolfsson & McAfee,supra note 6, at 246 (reporting, without attribution, a proposal to “[c]reate a national mutual fund distributing the ownership of [all] capital widelyand perhaps inalienably, providing a dividend stream to all citizens and assuring that capital returns do not become highly concentrated”); Ford,supra note 6, at 273–75; Kaplan, supra note 6, at 178–82; Daniel C. Dennett, Will AI Achieve Consciousness? Wrong Question, Wired (Feb. 19.,2019, 7:00 AM), https://perma.cc/QM8Y-3X8W (“[W]e should enact legislation that puts [tech entrepreneurs’] deep pockets in escrow for the public
good.”); Rana Foroohar, California’s New Model for Fixing Inequality, Financial Times (Oct. 13, 2019), https://app.ft.com/content/04830250-eb4511e9-a240-3b065ef5fc55; Noah Smith, The End of Labor: How to Protect Workers From the Rise of Robots, Atlantic (Jan. 14, 2013), https://perma.
cc/SU7B-QGNQ (“Everyone is born with an endowment of labor; why not also an endowment of capital? What if, when each citizen turns 18, thegovernment bought him or her a diversified portfolio of equity? . . . This portfolio of capital ownership would act as an insurance policy for eachhuman worker; if technological improvements reduced the value of that person’s labor, he or she would reap compensating benefits throughincreased dividends and capital gains.”).
See supra § IV(B).
See E-mail from Anthony Aguirre, supra note 270.
See id. The agreement establishing the SAF would also include some mechanism for aggregating constituents’ votes. See id.
See id.
See E-mail from Anthony Aguirre, Associate Professor of Physics, Univ. of Cal., Santa Cruz, to Cullen O’Keefe, Research Affiliate, Ctr. for the Governance of AI, Future of Humanity Inst., Univ. of Oxford (Jan. 9, 2019, 11:54 EST) (on file with author).
See id.
See id.
Id.
See id.
See generally Practical Law Corporate & Securities & Scott Towers, Poison Pills: Defending Against Takeovers/Stockholder Activism and Protecting
NOLs, Practical Law Practice Note 3-386-0340 (2019).
See id. § 2.
Cf. 15 U.S.C. § 18 (“No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any partof the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any partof the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity

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affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create amonopoly.”). See generally Einer Elhauge, Horizontal Shareholding, 129 Harv. L. Rev. 1267 (2016).
See Mathew Ingram, At Alphabet, There Are Only Two Shareholders Who Matter, Fortune (June 7, 2017), https://perma.cc/QB5S-7ATG.
See E-mail from Anthony Aguirre, supra note 270.
The British Labour Party is proposing forcibly transferring shares of thousands of large companies to workers. See Jim Pickard, UK’s Labour Would
Seize £300bn of Company Shares, Financial Times (Sept. 1, 2019), https://www.ft.com/content/dc17d7ee-ccab-11e9-b018-ca4456540ea6.
See id.
Cf. U.S. Const. amend. V (“[N]or shall private property be taken for public use, without just compensation.”).
A number of sources have suggested UBI as a solution to AI-induced unemployment. E.g., Brynjolfsson & McAfee, supra note 6, at 232–33;
The Freedom Dividend, Yang 2020, https://perma.cc/3M76-7ARZ (archived Feb. 2, 2019). Other sources have endorsed a similar program—the
negative income tax—which incentivizes work more than UBI. E.g., Brynjolfsson & McAfee, supra note 6, at 234–41; Rifkin, supra note 6, at 261.
For criticisms of UBI, see, e.g., Furman, supra note 25, at 8–9; Daron Acemoglu, Why Universal Basic Income Is a Bad Idea, Project Syndicate(June 7, 2019), https://perma.cc/S89F-HXBP.
For transparency, note that GiveWell was formerly affiliated with the Open Philanthropy Project, see Catherine Hollander, Separating GiveWell andthe Open Philanthropy Project, GiveWell: The GiveWell Blog (July 6, 2017), https://perma.cc/6HSE-V86Q, which provided some funding for thiswork, see supra note 106.
See Cash Transfers, GiveWell (Nov. 2018), https://perma.cc/K8M3-AJ3F.
See Catherine Hollander, Our Updated Top Charities for Giving Season 2018, GiveWell: The GiveWell Blog (Dec. 6, 2018), https://perma.
cc/9SNE-QEBN.
Cf. Vitalik Buterin et al., Liberal Radicalism: Formal Rules for a Society Neutral among Communities 5–6 (Sept. 17, 2018) (unpublished manuscript),https://perma.cc/H65U-FZAV.
See id.
See Dylan Matthews, Basic Income Can’t Do Enough to Help Workers Displaced by Technology, Vox (Oct. 18, 2019, 8:20 AM), https://perma.cc/
R8AH-87BA.
See infra app. II.
That the Clause would arguably involve exchange of unequal values does not render the Clause unsupported by consideration as a matter ofcontract law. See Restatement (Second) of Contracts § 79(c) (Am. Law Inst. 1981).
Id. § 90. See generally Lack Of Consideration As Barring Enforcement Of Promise To Make Charitable Contribution Or Subscription—Modern
Cases, 86 A.L.R. 4th 241 (originally published in 1991); Comment Note—Promissory Estoppel, 48 A.L.R. 2d 1069 § 7 (originally published in 1956);
Consideration For Subscription Agreements, 151 A.L.R. 1238 (originally published in 1944); Consideration For Subscription Agreements, 115 A.L.R.
589 (originally published in 1938); Consideration For Subscription Agreements, 95 A.L.R. 1305 (originally published in 1935); Consideration For
Subscription Agreements, 38 A.L.R. 868 (originally published in 1925).
Restatement (Second) of Contracts, supra note 296, § 90 cmt. f.
Id. illus. 16.
Id. illus. 17.
It is worth noting, however, that “relief [in such cases] may sometimes be limited to restitution or to damages or specific relief measured by theextent of the promisee’s reliance rather than by the terms of the promise.” Restatement (Second) of Contracts, supra note 296, § 90 cmt. d.
(emphasis added). Still, such limitations seem primarily aimed at avoiding unjust enrichment of the promisee, see id., which would not be applicable here. Furthermore, cases applying this doctrine often enforce the full terms of the contract, not merely award reliance damages. See, e.g., Los
Angeles Traction Co. v. Wilshire, 67 P. 1086 (Cal. 1902) (promise for $2000 was fully enforced despite reliance of only $1505); Lasar v. Johnson, 58
P. 161, 163 (1899) (“[Reliance] was a good consideration for the promise to pay the full sum sued for, and it is therefore not necessary to consider
whether the defendants’ liability should be reduced to its proportion of the expense incurred in entertaining the grand parlor measured by theentire amount subscribed; the amount subscribed exceeding the expenditures by the sum of $241.52, but the amount of subscriptions collected
being $593.38 less than the amount expended.”).
See, e.g., Wilshire, 67 P. at 1088 (“The contract at the date of its making was unilateral, a mere offer that if subsequently accepted and acted uponby the other party to it would ripen into a binding enforceable obligation. When the respondent purchased and paid upwards of $1,500 for afranchise it had acted upon the contract, and it would be manifestly unjust thereafter to permit the offer that had been made to be withdrawn.”);Lasar, 58 P. at 162 (“The request of the defendants to the committee to regard their subscription as cash, and to go on and make all their arrangements, and the action of the committee in incurring obligations on the faith of this request, was a sufficient consideration to fix the liability of the
defendants upon their subscription . . . .”); Grand Lodge of the Indep. Order of Good Templars of the State of Cal. v. Farnham, 11 P. 592, 592–93(Cal. 1886); Christian Coll. v. Hendley, 49 Cal. 347, 349 (1874) (“If it clearly appears that a number of subscribers promise to contribute money, on
the faith of the common engagement, for the accomplishment of an object of interest to all, and which cannot be accomplished, save by theircommon performance, then it would seem that the mutual promises constitute reciprocal obligations.”); 1 B. E. Witkin, Summary 11th Contracts §254 (2018).
See, e.g., I. & I. Holding Corp. v. Gainsburg, 12 N.E.2d 532, 534 (N.Y. 1938) (“Our courts have definitely ruled that such subscriptions are enforceable
on the ground that they constitute an offer of a unilateral contract which, when accepted by the charity by incurring liability in reliance thereon,
becomes a binding obligation.”); In re Taylor’s Estate, 167 N.E. 434, 436 (N.Y. 1929) (“[I]f a thing is to be done by the promisee, be it ever so small,this is a sufficient consideration to sustain the promise. Was there a promise on the part of the churches, or either of them, to do something in
return for which the notes were given?”); Allegheny Coll. v. Nat’l Chautauqua County Bank of Jamestown, 159 N.E. 173, 175 (N.Y. 1927) (finding consideration in implied return promise to maintain memorial fund endowed by donor); Keuka Coll. v. Ray, 60 N.E. 325 (N.Y. 1901) (finding consideration
in founding a college by donor’s request); Twenty-Third St. Baptist Church v. Cornwell, 23 N.E. 177, 177 (N.Y. 1890) (finding no consideration wheresubscriber died before any reliance); Barnes v. Perine, 12 N.Y. 18, 25 (1854) (“The evidence, however, discloses a good consideration, in the . . .
obligations incurred by the promisee . . . at [the defendant’s] request.”); Joy T. Carmichael et al., 22 N.Y. Jur. 2d Contracts §§ 76, 83 (2018).
An injunction is a court order to do or refrain from doing some specific act. See generally William M. Lafferty & John P. DiTomo, Provisional Remedies: Delaware, Practical Law State Q&A w-000-4035 (2017).
N. River Ins. Co. v. Mine Safety Appliances Co., 105 A.3d 369, 380 n.47 (Del. 2014), as revised (Nov. 10, 2014).
See, e.g., Simon v. Pyrites Co., 128 A. 370, 371 (Del. Super. Ct. 1925).
See, e.g., Pomilio v. Caserta, 215 A.2d 924, 925 (Del. 1965) (“There is no right to an injunction as a matter of course. . . . The granting or refusal of
final injunctive relief rests within the sound judicial discretion of the trial court.”).
See supra § II.
See Hollinger Int’l, Inc. v. Black, 844 A.2d 1022, 1090 (Del. Ch. 2004); Kohls v. Duthie, 765 A.2d 1274, 1289 (Del. Ch. 2000); State v. Delaware State
Educ. Ass’n, 326 A.2d 868, 875 (Del. Ch. 1974).
See, e.g., In re Cogent, Inc. S’holder Litig., 7 A.3d 487, 513 (Del. Ch. 2010); Hollinger, 844 A.2d at 1090; In re Staples, Inc. S’holders Litig., 792 A.2d934, 960 (Del. Ch. 2001); Cantor Fitzgerald, L.P. v. Cantor, 724 A.2d 571, 586 (Del. Ch. 1998).
See, e.g., Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173, 184–85 (Del. 1986); Hollinger, 844 A.2d at 1090; ACE Ltd. v. Capital Re
Corp., 747 A.2d 95, 110 (Del. Ch. 1999).
See Bayard v. Martin, 101 A.2d 329, 334 (Del. 1953); Cook v. Oberly, 459 A.2d 535, 540 (Del. Ch. 1983).
See Weldin Farms, Inc. v. Glassman, 414 A.2d 500, 505 (Del. 1980); Oberly, 459 A.2d at 540; Pierce Family, Inc. v. Magness Const. Co., 235 A.2d
268, 270 (Del. Ch. 1967); McQuail v. Shell Oil Co., 183 A.2d 581, 585 (Del. Ch. 1962); Gray Co. v. Alemite Corp., 174 A. 136, 142 (Del. Ch. 1934).
See Organovo Holdings, Inc. v. Dimitrov, 162 A.3d 102, 115 (Del. Ch. 2017); Troy Corp. v. Schoon, 959 A.2d 1130, 1138 (Del. Ch. 2008); State ex rel.
Brady v. Pettinaro Enterprises, 870 A.2d 513, 536 (Del. Ch. 2005); Aquila, Inc. v. Quanta Servs., Inc., 805 A.2d 196, 208 (Del. Ch. 2002); Cantor,
724 A.2d at 586; McMahon v. New Castle Assocs., 532 A.2d 601, 606 (Del. Ch. 1987); Delaware State Educ. Ass’n, 326 A.2d at 876; see also New
Castle Cty. Vocational Tech. Educ. Ass’n v. Bd. of Educ. of New Castle Cty. Vocational Tech. Sch. Dist., 451 A.2d 1156, 1160 (Del. Ch. 1982) (“Nevertheless, the threat of an illegal action . . . must be imminent to justify injunctive relief.”).
E. I. duPont de Nemours & Co. v. Am. Potash & Chem. Corp., 200 A.2d 428, 432 (Del. Ch. 1964).
duPont is the only Delaware case mentioning this “well-recognized principle,” and it cites no other cases for the proposition. See id.
Cf. Pell v. Kill, 135 A.3d 764, 793 (Del. Ch. 2016) (finding irreparable harm when board action disenfranchised shareholders in derogation of fiduciary obligations, solely on the basis of such disenfranchisement); duPont, 200 A.2d at 436 (“[W]here there is a finding that a threat of use or disclosure exists which the court concludes will, if effectuated, constitute a breach of confidence, the court will grant appropriate relief.”). But cf. Sealy
Mattress Co. of New Jersey v. Sealy, Inc., 532 A.2d 1324 (Del. Ch. 1987) (finding breach of fiduciary duty but analyzing irreparable harm separately).
See, e.g., In re BankAtlantic Bancorp, Inc. Litig., 39 A.3d 824, 845 (Del. Ch. 2012); In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813, 839 (Del.
Ch. 2011); Abrons v. Maree, 911 A.2d 805, 810 (Del. Ch. 2006); Hollingsworth v. Szczesiak, 84 A.2d 816, 822 (Del. Ch. 1951).
See Theravectys SA v. Immune Design Corp., No. CV 9950-VCN, 2015 WL 1308273, at *12 (Del. Ch. Mar. 9, 2015); Mitchell Lane Publishers, Inc. v.
Rasemas, No. CIV.A 9144-VCN, 2014 WL 4925150, at *10 (Del. Ch. Sept. 30, 2014); Del Monte, 25 A.3d at 839; Cantor, 724 A.2d at 587; Lennane v.
Ask Computer Sys., Inc., No. CIV. A. 11744, 16 Del. J. Corp. L. 1521, 1534 (Del. Ch. Oct. 11, 1990); Newell Co. v. Wm. E. Wright Co., 500 A.2d 974, 975(Del. Ch. 1985).
See Elster v. Am. Airlines, 106 A.2d 202, 204 (Del. Ch. 1954); Allied Chem. & Dye Corp. v. Steel & Tube Co. of Am., 122 A. 142, 157 (Del. Ch. 1923).
This does not imply that any plaintiff who succeeds in proving a breach of fiduciary duty will also prove irreparable harm. Injunctions only issue for
future conduct, see, e.g., Young v. Red Clay Consol. Sch. Dist., 159 A.3d 713, 781 (Del. Ch. 2017), so there must be some threat of future breach to
warrant an injunction.
See supra § II.

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Tyson, 919 A.2d at 584; see also In re Am. Int’l Grp., Inc., 965 A.2d 763, 812 (Del. Ch. 2009); Dover Assocs. Joint Venture v. Ingram, 768 A.2d 971,
973 (Del. Ch. 2000).
Delaware Tr. Co. v. Partial, 517 A.2d 259, 262 (Del. Ch. 1986).
Ingram, 768 A.2d at 974 (appointing receiver pursuant to plaintiff’s contracted-for right thereto); cf. C & J Energy Servs., Inc. v. City of Miami Gen.
Employees’, 107 A.3d 1049, 1054 (Del. 2014) (“[A]n injunction cannot strip an innocent third party of its contractual rights while simultaneously binding that party to consummate the transaction.”). Numerous cases demonstrate the respect equity affords to contractual rights. See, e.g., Diebold
Computer Leasing, Inc. v. Commercial Credit Corp., 267 A.2d 586, 590 (Del. 1970) (“The jurisdiction of the Chancery Court to enjoin a threatened
breach of contract, for which breach damages would not be adequate, is unquestioned.”); Tull v. Turek, 147 A.2d 658, 664 (Del. 1958) (“An historicfield of equity jurisdiction is that of suits for an injunction to restrain the breach of the covenant of a contract. Such jurisdiction is by analogy as
broad as the jurisdiction of equity to compel the specific performance of a contract.”); Randolph v. Wilmington Hous. Auth., 139 A.2d 476, 489 (Del.
1958) (“The jurisdiction of equity to enjoin a breach of contract if the legal remedy is inadequate is too well-established to require discussion.”);Richard Paul, Inc. v. Union Imp. Co., 91 A.2d 49, 55 (Del. 1952) (“[A] clear violation of plaintiff’s rights under the lease has been established, without
the establishment of any counter-balancing equities in the defendant’s favor. Under such circumstances, the course of a Court of Equity is clear—it
must follow the law and protect the plaintiff’s legal rights.”).
See, e.g., Freedman v. Cont’l Serv. Corp., 622 P.2d 487, 492 (Ariz. Ct. App. 1980) (“As a sound general proposition, equity follows the law and acourt will enforce a valid contract according to its terms, even though enforcement may be harsh or result in a forfeiture.”); Preferred Prof’l Ins.
Co. v. The Doctors Co., 419 P.3d 1020, 1027 (Colo. App. 2018) (“Absent a showing that a contractual provision violates public policy, equity should
not be employed to defeat a party’s bargained-for contractual rights.”); Honolulu Brewing & Malting Co. v. Bartlett, 23 Haw. 192, 196 (1916) (“Equity
follows the law, does not oppose the law; it assists parties in the protection of their legal rights when the law is unable to do so; it protects thevigilant, but does not invade private fundamental rights to impose under a contract obligations not assumed in such contract, either by express
terms or by necessary implication.”); Norcomo Corp. v. Franchi Const. Co., 587 S.W.2d 311, 317 (Mo. Ct. App. 1979) (“The rights of the parties are to
be determined from the contracts into which they entered and the consequences of those contracts and not from some generalized concepts ofequity.”); McCall v. Carlson, 172 P.2d 171, 187–88 (Nev. 1946) (“Our equitable powers do not extend so far as to permit us to disregard fundamental
principles of the law of contracts, or arbitrarily to force upon parties contractual obligations, terms or conditions which they have not voluntarily
assumed. In this regard, equity respects and upholds the fundamental right of the individual to complete freedom to contract or decline to do so,
as he conceives to be for his best interests, so long as his contract is not illegal or against public policy. In this respect, and many others, equity
follows the law. Much as we would like to relieve the appellant from his unfortunate situation, we cannot rightfully do so, as we must maintainthe necessary certainty, stability and integrity of contractual rights and obligations.”); Dunkin’ Donuts of Am., Inc. v. Middletown Donut Corp., 495
A.2d 66, 74 (N.J. 1985) (“[T]he equitable maxim ‘equity follows the law,’ . . . instructs that as a rule a court of equity will follow the legislative andcommon-law regulations of rights, and also obligations of contract.”); ARC LifeMed, Inc. v. AMC-Tennessee, Inc., 183 S.W.3d 1, 26 (Tenn. Ct. App.
2005) (“What appears to be fair as a matter of equity cannot prevail in the face of . . . contractual provisions governing the rights of the parties.”);Texas Health Ins. Risk Pool v. Sigmundik, 315 S.W.3d 12, 14 (Tex. 2010) (“[E]quitable doctrines conform to contractual and statutory mandates, notvice versa.”); Fortis Benefits v. Cantu, 234 S.W.3d 642, 648–49 (Tex. 2007) (“We generally adhere to the maxim that ‘equity follows the law,’ which
requires equitable doctrines to conform to contractual and statutory mandates, not the other way around. Where a valid contract prescribes particular remedies or imposes particular obligations, equity generally must yield unless the contract violates positive law or offends public policy.”); Pac.
Fin. Corp. v. Snohomish Cty., 295 P. 110, 112 (Wash. 1931) (“Equity . . . follows the law, and the courts have no authority on any equitable principle torewrite the contract for the parties.”).
41 A.3d 432 (Del. Ch. 2012).
See id. at 435.
Id. at 436–37 (citations omitted).
See id. at 435.
See id. at 444.
See id. at 449.
See id. at 450.
Id. at 449.
Id. at 450.
501 A.2d 1239.
See id. at 1245–46, 1251.
See id. at 1252.
See id. at 1251.
Id.
See id. at 1252.
Rescission of a contract is technically distinct from an injunction. It is only available in circumstances more extreme those warranting an injunction:[C]ommon-law rescission of a sale or a contract of sale has been allowed on broad principles of justice. Rescission is an equitable remedy available
in contract cases when the resulting injury is irreparable, when damages at law are inadequate or when damages would be difficult or impossible
to determine. Generally, and subject to statutory provisions, a contract may be rescinded by one party without the consent of the other on grounds
such as fraud or mistake [of fact], lack of mutuality, or, in some cases, breach of contract or condition. On the other hand, neither party may alone,
and without the consent of the other, rescind the contract arbitrarily, without adequate cause or for his or her own default. One may not unilaterally
rescind a contract of sale because it is uneconomic or imprudent.
William H. Danne, Jr. et al., 77A C.J.S. Sales § 187 (June 2018) (citations omitted). Given the extremity of the circumstances warranting rescission,and the unlikelihood of them arising in connection with a Windfall Clause, we do not consider rescission further. However, planners should beaware that rescission is theoretically possible.
No. 12883, 1995 WL 376919 (Del. Ch. June 15, 1995) [hereinafter Arnold III].
Arnold v. Soc’y for Sav. Bancorp, Inc., 650 A.2d 1270, 1273, 1277 (Del. 1994) [hereinafter Arnold II].
See id. at 1287–89.
Arnold III, 1995 WL 376919, at *4 (citations omitted).
Arnold v. Soc’y for Sav. Bancorp, Inc., No. C.A. 12883, 1993 WL 183698 (Del. Ch. May 29, 1993) [hereinafter Arnold I].
509 A.2d 584 (Del. Ch. 1986).
See id. at 587.
See id. at 586–87.
See id. at 590.
Id. at 591.
See id. at 592.
Id. at 600 (emphasis added). Interestingly, this suggests that the court thinks that Bally’s contract rights had already vested, despite the fact thatthe merger had not yet closed.
MGM, 509 A.2d at 600.
Cf. id. at 597.
Id. at 600 n.12 (citations omitted).
See, e.g., Reid v. Spazio, 970 A.2d 176, 183 (Del. 2009); Adams v. Jankouskas, 452 A.2d 148, 157 (Del. 1982).
Meso Scale Diagnostics, LLC v. Roche Diagnostics GmbH, 62 A.3d 62, 76 (Del. Ch. 2013) (quoting Scureman v. Judge, 626 A.2d 5, 13 (Del. Ch.
1992)).
Id. at 76–77 (quoting Jankouskas, 452 A.2d at 157).
Jankouskas, 452 A.2d at 157; see also Spazio, 452 A.2d at 183; Carsanaro v. Bloodhound Techs., Inc., 65 A.3d 618, 645 (Del. Ch. 2013). See generally Del. Code tit. 10, § 8106.
Bloodhound, 65 A.3d at 645; see also Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 860 A.2d 312, 319 (Del. 2004).
Halpern v. Barran, 313 A.2d 139, 141 (Del. Ch. 1973).
See Wal-Mart, 860 A.2d at 319.
625 A.2d 269 (Del. Ch. 1993).
See id. at 270.
See id.
See id.
See id. at 270–71.
Id. at 271 (emphasis added) (footnote omitted).
See supra § I.
This structure is inspired by the Centre For Effective Altruism’s EA Funds. See generally Frequently Asked Questions, EA Funds, https://perma.cc/
X4MP-SCSQ (archived Apr. 16, 2019).
For transparency, we note that one such EA Fund—the Long-Term Future Fund—has funded the Berkeley Existential Risk Initiative, which is a
publisher of this Report. See Nick Beckstead, Payout Report: Long-Term Future Fund, EA Funds (Mar. 20, 2017), https://perma.cc/Y2LX-STXT. We
further note that the Centre for Effective Altruism and the other publisher of this report, the Future of Humanity Institute, share office space, somestaff, and work together intimately on a number of projects.
One could further add mechanisms to incentivize managers to do their jobs effectively. Managers could earn bonuses based on how many

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quality-adjusted life-years (QALYs) per dollar their funded projects achieved in the past two years, based off estimates from an independent auditor(which would also be funded by the Clause). For example, managers could earn a bonus for hitting ambitious QALY/dollar goals. Or, to incentivize
maximizing QALYs/dollar, they could earn bonuses based on their performance relative to other managers. To avoid the problem of managers
relying on a very small number of unusually effective projects to obtain a high average effectiveness (but undesirably withholding money otherwise), bonuses could be available only after managers had released a certain amount of funding, or comparisons could be made for each trancheof funding (e.g., Which manager spent her most-effective million dollars most effectively? Which manager spent her second-most-effective million
dollars most effectively?) then aggregated.
Note that the incentive structure would need to account for the possibility that future funding opportunities might be more effective than present
ones. See generally Julia Wise, Giving Now vs. Giving Later: A Summary, Effective Altruism Forum (July 23, 2013, 12:00 AM EDT), https://perma.
cc/34XA-VUX5. So, for example, bonuses should go up over time if managers’ grants improve over time (e.g., due to learning, increased expertise,or improved technology).
For more on existing social impact measurement and incentive structures, see Global Impact Investing Network, supra note 116; Kerr, supranote 145, at 642–54.
Cf. supra § II(B)(2) (promoting the “four-eyes principle”).
Cf. Elster, supra note 111, at 109–11, 119–20 (discussing the value of anonymity in jury deliberations and mechanics).
Manne, supra note 117.
See id. at 240–52.
See id. at 252–64.
See id.
For a similar proposal by Anthony Aguirre, see supra § V(D)(3).
See generally Sitkoff & Dukeminier, supra note 115, at 624–54.
See generally id. at 587–693.
See AI for Good Global Summit, supra note 56.
U.N. Secretary-General, supra note 118.
For a list of the SDGs, see Sustainable Development Goals, Sustainable Dev. Goals Knowledge Platform, https://perma.cc/LR7L-KFJ9 (archived Jan. 29, 2019).

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