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In a bold and decisive move, Microsoft CEO Satya Nadella stepped into the turmoil at OpenAI over the weekend and came out with significant gains. Nadella worked tirelessly negotiating to bring Sam Altman, the recently ousted OpenAI CEO, to lead a new Microsoft subsidiary focused on AI innovation. This group will include OpenAI co-founder Greg Brockman and other employees who supported Altman’s strategy.
This is a big win for Microsoft, as it secures Altman’s expertise in the booming field of generative AI. Altman and Brockman were key drivers of OpenAI’s growth. OpenAI had been valued between $80 and $90 billion, which would have meant a substantial investment for Microsoft to acquire. Now, Microsoft gets the main assets—the talent—and possibly the OpenAI models, all at a significant discount.
The stock market reacted positively, with Microsoft’s shares rising by over 1 percent at the start of trading on Monday, valuing the company at a record $2.78 trillion.
Initially, it seemed like OpenAI would continue its focus on safe generative AI, with Microsoft holding a significant stake in the company. However, by Monday morning, the situation had changed. Most remaining OpenAI employees supported a letter demanding the board’s resignation and the reinstatement of Altman and Brockman, threatening to quit otherwise. If the board steps down, Altman and Brockman might return, potentially leading OpenAI to greater growth without the constraints of a safety-focused board. This could still benefit Microsoft, as its investment and partnership with OpenAI provide access to valuable technology and expertise.
Tensions might arise between OpenAI and Microsoft, as both aim to lead in enterprise generative AI. However, this tension could be advantageous, providing Microsoft a competitive edge over Amazon AWS and Google.
The return of Altman and Brockman to OpenAI isn’t guaranteed, as the current board may resist and prioritize the company’s original mission. Microsoft has assured positions for all OpenAI employees willing to join if the company doesn’t stabilize.
The situation further evolved on Monday when co-founder Ilya Sutskever, a proponent of safeguards around OpenAI’s technology, sided against the board. Sutskever’s stance could influence the company’s direction, whether within Microsoft or if the board resigns and employees stay at OpenAI.
During the weekend, Nadella and colleagues attempted to reinstate Altman to restore stability at OpenAI. However, the board hired Emmett Shear, former Twitch CEO, as interim CEO instead. Nadella then offered Altman a role within Microsoft, likely involving an attractive incentive package without the risks Altman faced at a new startup.
Nadella expressed excitement about Altman joining Microsoft to drive innovation. Microsoft plans to continue its collaboration with OpenAI, launch new features, and support a new AI research team, enhancing its products like Windows and Teams.
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