After a period of chaos, Sam Altman is making a comeback as the Chief Executive Officer of OpenAI. The big question now is what changes Microsoft will be able to achieve in order to enhance its control over the artificial intelligence startup.
OpenAI announced on social media site X (formerly Twitter) on Wednesday that it had reached an agreement in principle for Altman’s return as CEO, along with the appointment of a new board of directors.
The events leading up to this development were quite tumultuous. Altman was previously fired by the board, resulting in the majority of OpenAI’s employees threatening to resign. This triggered Microsoft, which holds a 49% stake in the ChatGPT creator after investing approximately $13 billion in the business, to take action by offering to hire the staff in order to contain the fallout.
Altman’s return is expected to solidify the relationship between OpenAI and Microsoft. However, there are still several unanswered questions that will determine the value of the AI startup and its role in Microsoft’s future plans.
One pressing issue is the revelation of the exact reasons behind Altman’s termination by the former board. Additionally, there is uncertainty surrounding whether OpenAI will remain structured as a nonprofit company and if Microsoft will proceed with its previously announced in-house AI research plans.
During the aftermath of Altman’s firing, there was speculation that Microsoft might have been able to acquire all of OpenAI’s talent without having to purchase the remaining interest in the company. The estimated overall value of OpenAI was between $80 billion and $90 billion, based on a planned share sale. In retrospect, shareholders may feel slightly disappointed that the relationship with OpenAI remains somewhat messy.
Microsoft has been careful not to exert full control over OpenAI, potentially to avoid triggering antitrust reviews by regulators. However, this does not mean that things will go back to exactly how they were. Both OpenAI’s new board and Altman himself can expect Microsoft to closely monitor their actions moving forward.
Microsoft’s Commitment to OpenAI
Microsoft CEO Satya Nadella expressed his confidence in never being caught off guard again during a recent podcast interview with Kara Swisher. This statement was made before the announcement of Sam Altman’s return to OpenAI. Altman himself took to Twitter to express his excitement about coming back, and former OpenAI President Greg Brockman echoed his sentiment.
Nadella also expressed optimism about the changes happening within the OpenAI board. According to sources familiar with the negotiations, Microsoft is expected to strive for a seat on the expanded OpenAI board, which could eventually comprise up to nine individuals. Nadella emphasized the importance of their partnership in delivering the next generation of AI solutions to customers and partners.
While Microsoft aims to strengthen its association with OpenAI, it is also exploring alternative options to reduce its reliance on the organization. In fact, Microsoft recently highlighted its success in developing smaller AI models that possess similar capabilities to larger models like OpenAI’s GPT-4 but at lower costs.
In premarket trading on Wednesday, Microsoft shares saw a 0.8% increase, reaching $376.01. Although slightly below the record high of $378.87 achieved on Monday, the stock continues to perform well.
As for OpenAI, its newly formed initial board will include Bret Taylor, the former co-CEO of Salesforce, serving as chairman. Additionally, Larry Summers, the former U.S. Secretary of the Treasury, and Adam D’Angelo, the founder of Quora, will join as board members. It is worth noting that Altman will not be a part of this initial board.
Of the previous board members responsible for Altman’s removal last Friday, only D’Angelo remains involved in OpenAI’s governance.
