OpenAI: A boardroom coup wrenches the AI world

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Sam Altman walked onstage at OpenAI’s first developer conference on Nov. 6 to rapturous applause as he "ticked off the company’s accomplishments," said Max Chafkin and Rachel Metz in Bloomberg. Last week, the co-founder and chief executive of the world’s most famous artificial intelligence company was fired by its board via teleconference. The abrupt dismissal less than two weeks after Altman’s thunderous ovation triggered a chaotic weekend of jockeying over the future of the company that brought ChatGPT to the world and set off an international AI frenzy. More than 730 of OpenAI’s 770 employees signed a letter saying they would quit if the board didn’t resign. Microsoft, which owns a 49% stake, promptly said it would hire Altman to "lead a new in-house AI lab alongside OpenAI board member Greg Brockman." Meanwhile, OpenAI’s board clung to its original goal as a nonprofit founded to "advance digital intelligence" to "benefit humanity as a whole." Under Altman, that mission was spinning "out of control," becoming "maybe even dangerous."

To understand the chaos you have to know that OpenAI isn’t structured like a normal company, said Rohan Goswami at CNBC. At the top is its board, the "group responsible for pushing Altman out," which controls a nonprofit corporation, OpenAI Inc. That nonprofit owns and controls a subsidiary, OpenAI Global, which is the company that Microsoft invested in. The for-profit subsidiary was created so that OpenAI could lure enough talent to keep up with Big Tech rivals. But "none of its largest backers, even Microsoft, have board seats." Microsoft has something else, though, said Ben Thompson in Stratechery: "a perpetual license to all OpenAI intellectual property, including source code." The question was always whether "it had the talent to exploit that IP." You can make the case that by hiring Altman and Brockman Microsoft can "acquire OpenAI for $0 and zero risk of an antitrust lawsuit."

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This isn’t Altman’s first ugly corporate breakup, said Eric Newcomer in his Substack newsletter. His departure as president of the startup accelerator Y Combinator "was more contentious than publicly understood," echoing some of what’s going on here. Two of OpenAI’s former executives quit to form a safer AI company, Anthropic, because they "felt troubled enough" by Altman’s approach. This fiasco is exactly why AI demands regulation, said Steve Petersen in the New York Post. The technology carries too much potential danger for corporations to police themselves. "Investor greed should not be a thumb on this particular scale."

OpenAI tried and failed to straddle a rift forming in Silicon Valley, said The Economist. On one side are the "doomers, who believe that, left unchecked, AI poses an existential threat to humanity." Opposite them are the "boomers," who think doomers are hysterical and ignorant of AI’s "potential to turbocharge progress." The board seems to be in the doomer camp, while Altman himself "seemed to have sympathy with both groups." Whichever side can prove "more influential" will shape what regulators do to promote or limit AI — which in turn will "determine who will profit from AI most in the future."

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