Microsoft ‘Stronger’ After OpenAI Chaos, Altman Hire

Microsoft has emerged in a “stronger” position after the shock ouster of former chief Sam Altman from OpenAI, after hiring Altman and other senior staff, analysts have said.

Altman’s departure from the company raised questions around the future of AI at Microsoft, which has invested billions in the start-up and uses OpenAI technology for most of its AI offerings.

Microsoft made a number of AI-related announcements at its Ignite conference last week, including the development of an in-house AI chip that could lessen its reliance on market leader Nvidia.

The company, along with other major OpenAI investors, had lobbied over the weekend for the board to reverse its decision and bring Altman back on board.

Sam Altman. Image credit: OpenAI

‘Stronger’

But the board refused to resign in order to allow Altman’s return.

In response, at roughly midnight local time Microsoft chief executive Satya Nadella announced that Altman and former OpenAI president Greg Brockman were joining the firm to head a new AI research unit.

The move means Altman, who has become the public face of the AI industry over the past year, will remain with Microsoft rather than potentially moving to a competitor, noted Webush Securities analyst Dan Ives.

“If Microsoft lost Altman, he could have gone to Amazon, Google, Apple, or a host of other tech companies,” he said in a research note.

“Instead he is safely in Microsoft’s HQ now. We view Microsoft now even in a stronger position with Altman and Brockman at Microsoft running AI.

Greg Brockman. Image credit: OpenAI

Share sale disruption

Other former OpenAI staff are expected to serve in the new Microsoft unit, including researcher Szymon Sidor.

Ives compared the weekend’s manoeuvres to a high-stakes poker game.

“In a nutshell, the four-person board at OpenAI was at the kids’ poker table and thought they won until Nadella and Microsoft took this all over in a World Series of Poker move for the ages,” he said.

The turmoil is likely to derail an expected share sale at an $86 billion (£69bn) valuation, which could motivate other staff to depart OpenAI for Microsoft.

“The OpenAI for-profit subsidiary was about to conduct a secondary at a $80 billion+ valuation,” wrote chip industry newsletter SemiAnalysis.

“These ‘Profit Participation Units’ were going to be worth $10 million+ for key employees. Suffice it to say this is not going to happen now.”

Image credit: Ilgmyzin/Unsplash

‘Deep regret’

On Monday more than 500 of OpenAI’s 770 staff signed a letter threatening to quit en masse and join Microsoft unless the board resigned and brought back Altman and Brockman.

The letter was signed by Ilya Sutskever, chief scientist of OpenAI and himself a member of the four-person board.

Sutskever wrote on X, formerly Twitter, that he “deeply” regretted his participation in Altman’s sacking.

“I never intended to harm OpenAI,” he wrote. “I love everything we’ve built together and I will do everything I can to reunite the company.”

A number of senior staff including Mira Murati, OpenAI’s chief technology officer and briefly interim chief executive, said in posts on X on Monday that “OpenAI is nothing without its people”.

Matthew Broersma

Matt Broersma is a long standing tech freelance, who has worked for Ziff-Davis, ZDnet and other leading publications

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