There was a severe earthquake in the AI industry at the weekend, the consequences of which cannot yet be foreseen.
The events in sequence:
On Friday afternoon, OpenAI’s board fired its CEO Sam Altman in an internal coup orchestrated by chief AI researcher Ilya Sutskever. Mira Murati takes over Altman’s job. Microsoft, as the largest investor, was surprised by this coup and was informed of it only minutes before it was announced. On Saturdays, rumors about the return of the CEO and the resignation of the board of directors leaked out to the public. Investors, employees and managers within the company had stood up for Altman and director Greg Brockman, who resigned in solidarity. Altman calls for a restructuring of the board and gives them until 5 o’clock in the afternoon to respond. The negotiations fail, the new CEO of OpenAI is Twitch CEO Emmett Shear Microsoft hired Sam Altman and Greg Brockman for a new AI research team.
To understand this mess involving some of the AI industry’s leading minds, one must first understand OpenAI’s corporate structure.
OpenAI Inc. was founded in 2015 as a non-profit with the aim of conducting AI research with a focus on security and so-called AI alignment “for the benefit of all humanity” that is not driven by profit motives and commercial interests. At the same time, there is Open AI LLC, a company that develops commercial applications. Microsoft, as the largest financial backer, is the minority owner of this commercial arm.
Sam Altman represents OpenAI’s commercial arm and has pushed for ever faster product development and commercial exploitation since ChatGPT’s global triumph, while Ilya Sutskever expressed security concerns and saw the development of General AI (breaking latest news) on the horizon in the near future. Within the company, two of what Altman himself called “tribes” in a 2019 email formed: one group of employees and managers focused on commercial exploitation, the other group followed the original goal of the safe development of general AI (breaking latest news). The coup was the result of an internal power struggle between two factions, and while on the surface it may look as if the Safe breaking latest news faction won, the overall picture is quite the opposite.
On the one hand, with Altman’s expulsion, the board of directors has successfully underlined its role in the company’s original mission, which focused on security. On the other hand, many investors and financiers are likely to be deterred by the tumultuous events, which is likely to jeopardize the actual goal – the development of breaking latest news: It is not known whether OpenAI is already profitable or whether the ongoing costs for servers and GPUs are taking away from the considerable current income Eat up 80 million dollars a month again, especially in view of the massive number of users. Even as a nonprofit, OpenAI relies on money from investors and its future is questionable after the debacle.
In addition, by hiring Altman and Brockman, Microsoft has made it clear that they will continue to work aggressively on expanding AI technology – whether with OpenAI or its competitors remains an open question. Microsoft is pushing AI into all products, from the Windows operating system to their Office products to Github Copilot – the market power behind Microsoft’s AI efforts is immense, especially thanks to their cloud computing platform Azure, on which OpenAI’s AI products run and theirs Revenue increased by 29% in the third quarter of 2023 alone.
On the Thursday before his expulsion, Altman had announced new breakthroughs in AI development at the APEC CEO Summit, increasing pressure on those parts of the company whose priorities are AI safety. With Altman now head of a new team for AI research at Microsoft, which in turn is a shareholder in OpenAI LLC, Microsoft now has all the trump cards, as the largest investor not only controls OpenAI’s cash flow, but now also has two charismatic ones in Altman and Brockman Leaders on board. A development that is likely to further force the split within OpenAI.
On the surface, Sam Altman’s now apparently final expulsion is a win for the safe development of AI. In reality, Microsoft is the real winner of this coup and, buoyed by the massive revenues thanks to OpenAI’s commercial arm, they will expand their AI development enormously, whether with OpenAI products or a new open source strategy like Facebook is open. Especially as an opponent of open source AI development, this development certainly worries me.
Finally, here are the film tips for the drama: Knives Out and, of course, Game of Thrones. Automated AI popcorn included. (I follow developments with updates in my newsletter.)