OpenAI CEO Sam Altman (left) talks to Microsoft CEO Satya Nadella about their partnership at OpenAI DevDay. Barbara Ortutey/AP
Satya Nadella was instrumental in the failed talks to bring Sam Altman back to OpenAI.
Of all the losers in this fiasco, Microsoft was potentially the biggest party.
But Nadella made a move for the history books by hiring Altman and his loyalists to work directly for Microsoft.
This is a machine translation of an article from our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
On Monday morning it was official: Sam Altman could not be convinced to return to OpenAI. But in a brilliant strategic move, CEO Satya Nadella immediately found a way out of what could have been a disaster for Microsoft.
Nadella hired Altman along with other prominent colleagues who were leaving OpenAI. In the future, they will work directly for Microsoft “to lead a new advanced AI research team,” Nadella wrote in a post on X on Monday.
What happened?
As soon as news of Altman’s ouster from the company spread throughout the tech industry on Friday, VCs undoubtedly made plans to write checks for his next project. Prominent VC Vinod Khosla, for example, wrote on X: “To be clear, Khosla Ventures wants @sama back at @OpenAI but will support him in whatever he does next.”
Because one thing was certain: wherever Sam Altman went, he would certainly have no problems or qualms about competing with OpenAI and poaching the company’s brightest minds. After all, its co-founder Greg Brockman resigned immediately in protest of the firing, as did three senior researchers at OpenAI. Other employees also threatened to quit if Altman wasn’t reinstated: Nearly 500 signed a letter calling on the board to resign and reinstate Altman.
So it was clear: the loser in this matter is not Altman. But Microsoft and its CEO Satya Nadella – at least that’s what most people thought.
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“OpenAI is like Patrick Mahomes for the Kansas City Chiefs football team. Nadella recognizes this, and losing Sam is not an option. The OpenAI board is way overstretched and the failed coup is now backfiring,” said investor Dan Ives, an analyst at Webush, in an interview with Business Insider.
Microsoft hat Reportedly ten billion dollars (9.1 billion euros) invested and owns a significant stake – according to some reports according to up to 49 percent – at a for-profit entity run by the nonprofit OpenAI. (Although Microsoft has never publicly confirmed the size of this stake.)
The non-profit organization OpenAI was governed by a six-member board of directors that did not own shares and included Altman and Brockman. A simple majority vote was enough to fire Altman and install CTO Mira Murati as interim CEO. (Murati also later publicly supported Altman and has already stepped down as interim CEO. She was replaced by former Twitch CEO and co-founder Emmett Shear.)
OpenAI warned Microsoft just minutes before announcing Altman’s firing, sources told Business Insider. Until Friday, Microsoft’s deal with OpenAI was a major coup for Nadella. It gave Microsoft broad access to the technology at the heart of AI development – and prevented its competitors from doing the same.
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If Altman had now decided to found a new AI startup – which he could certainly have easily staffed with top developers – Microsoft would have been in big trouble. Because such a startup would probably have looked for another cloud investor or partner. Generative AI, after all, requires massive, specialized computing power to function – especially if it is to be carried out for millions of customers. Google or Amazon would certainly have tried to make Altman an offer he couldn’t refuse.
“The biggest concern is that Altman ends up at Google or Amazon, which would be a nightmare for Microsoft,” Ives wrote in an analysis before news of Nadella’s coup broke.
But the problem wasn’t just the money invested and the profits from that investment that would be lost to Microsoft. Microsoft has also built OpenAI technology into virtually all of its major products, beating its competitors to market. Just earlier this month, the company announced more than integrations with OpenAI technology in Microsoft’s AI tools, AI models and tools in its cloud. Copilot, its GPT-based chat assistant, is used everywhere.
And Microsoft has also cut or scrapped several other internal AI projects to rely on OpenAI technology, sources told Business Insider. The company has discontinued various “industrial metaverse” projects and laid off employees. The in-house “industrial metaverse” was a key AI strategy before ChatGPT really took off this year. And that meant (and could still mean) that Microsoft no longer has a quick backup plan if OpenAI collapses.
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Nadella hires Altman and assures collaboration with OpenAI
On Monday, Nadella reiterated that his confidence in the OpenAI unit, whatever it becomes, remains. “We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and to continue supporting our customers and partners,” he wrote.
While the 500 employees are still hoping that their mass exit threat could fix the current OpenAI calamity and bring Altman back, various reports – and just plain common sense – say Altman won’t be coming back.
In any case, this no longer plays a role for Microsoft. Nadella has just hired the golden goose while still having near-exclusive access to the golden eggs she previously laid. OpenAI may or may not recover. But Nadella’s ambition to continue to beat its competitors in generative AI clearly remains.
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Read the original article in English here.