Winners and losers of ChatGPT owner OpenAI’s wild few days

NEW YORK – For a while this weekend, it looked as if Mr Sam Altman might return as a conquering hero to OpenAI, the company whose board had fired him as chief executive officer on Friday.

It would have been another shocking twist in a saga that was already full of them. And Mr Altman had a lot of leverage. OpenAI employees had rallied behind him since his firing, and OpenAI’s investors were pushing the board to bring him back. Billions of dollars – and, possibly, the trajectory of the entire artificial intelligence (AI) industry – hung on the fate of the board’s decision, and many expected it to cave under pressure and reverse itself.

Instead, the board held firm, rejecting Mr Altman’s return and affirming in a late-night memo to employees on Nov 19 that removing him was “necessary to preserve the board’s ability to execute its responsibilities and advance the mission of this organisation”. It appointed Mr Emmett Shear, the former Twitch boss, as interim chief.

Hours later, Microsoft CEO Satya Nadella announced that Mr Altman and his top lieutenant, Mr Greg Brockman, would join the tech giant to lead a new AI research division.

The OpenAI saga is far from over. Things are shifting quickly, and there is plenty we still do not know – including the reason the board decided to fire Mr Altman in the first place. (In the memo on Nov 19, the board said there had been no specific incident that led to the firing, but rather that Mr Altman had simply lost its trust.)

But even without knowing much about the inciting incident, we can start to assess the damage.

Loser: OpenAI

The most obvious loser in all this is OpenAI itself.

Before Nov 17, the company was the hottest name in tech, with a celebrity leader, a household-name product in ChatGPT and a murderers’ row of AI talent that was the envy of Silicon Valley giants. It was in the middle of a tender offer that would have allowed employees to cash out their stock at an eye-watering valuation, and its cutting-edge AI language model, GPT-4, was best in class.

Now, the company is in chaos. Its top leaders are gone. Morale is shattered. Nearly all of OpenAI’s roughly 770 employees have threatened to quit and follow its ousted leader to Microsoft unless the board resigns. The new CEO has said he wants to slow AI down, and the company is still highly dependent on Microsoft, which has the enormous computing power that OpenAI needs to run its models.

Winner: Microsoft

No one’s weekend had a bigger turnaround than Microsoft, OpenAI’s biggest investor.

On Nov 17, when Mr Altman was fired, it looked as if Mr Nadella might lose one of his most powerful allies. Microsoft invested US$13 billion (S$17.4 billion) in OpenAI, and under Mr Altman’s leadership, the company had become a key partner of Microsoft’s. Its technology is the backbone of many of the AI services, such as the company’s suite of Copilot AI products, that Microsoft is betting the future of its business on.

Mr Nadella would have clearly preferred to see Mr Altman reinstated. But when it was clear that was not happening, he did the next best thing: swooping in to offer jobs to Mr Altman, Mr Brockman and their loyalists.

Strategically, it was a masterstroke. Now, Microsoft will be able to continue using OpenAI’s models to power its products in the short term, while also giving a new, Altman-led team the money and computing power it needs to build new Microsoft-owned models over the long term. He will get a bunch of talented AI researchers from OpenAI, and Microsoft now effectively owns 100 per cent of a new AI lab that any Silicon Valley venture capitalist would have lined up to fund.

Winners: AI doomers and effective altruists

For years, a community of AI researchers and activists – many affiliated with the effective altruism movement, whose adherents think that reason and data can be used to determine how to do the most good – have warned that AI systems were becoming too powerful, and that out-of-control AI could pose an existential threat to humanity.

People with these fears – sometimes mocked as “doomers” or “decels” by their critics – were once considered fringe. But over the past several years, they have been moving towards the mainstream, gathering signatures on open letters and warning regulators to take AI safety seriously. And on Nov 17, they took down the CEO of the world’s leading AI company.

Dr Ilya Sutskever, OpenAI’s chief scientist, who led the coup against Mr Altman, is not an effective altruist, but he appears to have been motivated by similar fears. Two of the board members who supported the coup, Ms Tasha McCauley and Ms Helen Toner, have ties to effective altruist groups.

If OpenAI ends up being irreparably harmed by Mr Altman’s firing, people will blame the board for breaking one of Silicon Valley’s most promising young start-ups, and destroying billions of dollars in shareholder value.

But the board has clearly succeeded on its own terms. It was worried that Mr Altman was moving too fast to build powerful, potentially harmful AI systems, and it stopped him. That is a victory for the cause, even if it comes at the expense of the company.

Losers: Investors

No one was rooting harder for Mr Altman’s return to OpenAI than the investors and venture capitalists who backed him, and who stood to lose their money if he left.

Many of these investors are techno-optimists who believe that AI will be an unalloyed good for society, and they loved Mr Altman’s essentially optimistic take on AI’s future. (They also loved that he made them a lot of money.)

These investors now have stakes in a company with an interim CEO, a workforce in revolt and an unclear path forward. What is worse, the only way they can invest in Mr Altman’s new company is by buying Microsoft shares.

Unclear: OpenAI’s rivals

It is not clear yet whether rival AI companies will benefit from Mr Altman’s ouster.

On the one hand, companies like Google, Anthropic and Meta could benefit from a weakened OpenAI if it allows them to catch up to the company’s AI progress, or siphon off key employees. (Recruiters wasted no time trying to poach unhappy OpenAI workers on Nov 17.)

But it also means they will be competing with a stronger Microsoft. And it means that Mr Altman’s new AI efforts will not be constrained by the same convoluted non-profit governance structure as OpenAI was, meaning he might be able to move even faster. NYTIMES