A chaotic shakeup at OpenAI

OpenAI’s board of directors fired Sam Altman as CEO on Friday — a shock decision with ramifications for the entire AI industry. After Altman and allies campaigned throughout the weekend to get him reinstated, the board affirmed its decision and brought in former Twitch CEO Emmett Shear to lead the company responsible for ChatGPT. Trouble is, that there may be no one left to lead.

Microsoft, which has invested $13 billion in the for-profit arm of OpenAI but did not hold a seat on its nonprofit board of directors, was blindsided by Altman’s ouster. Microsoft CEO Satya Nadella announced that Altman and fellow OpenAI co-founder Greg Brockman are joining Microsoft to “lead a new advanced AI research team.” Nadella may not have been able to control OpenAI’s board, but he can poach their best talent for his own gain.

Microsoft may soon have most of OpenAI’s team. More than 700 of the 770 employees of OpenAI have signed an open letter threatening to quit unless the board resigns and Altman is reinstated. They all have open offers to join Microsoft. That includes Mira Murati, the former chief technology officer, whom the board briefly appointed interim CEO on Friday before bringing in Shear, an outsider. A group of investors, including Thrive Capital, is still pressuring the board to reinstate Altman, and Nadella said that, despite his offer to absorb Altman and his loyalists, he would welcome this outcome.

OpenAI’s board has still not explained why Altman was fired. It merely said Altman was “not consistently candid in his communications with the board” and that the four members had lost confidence in him. In effect, the board was exercising its duty to put the organization's mission above profit motive or even employee demands: OpenAI has a unique setup where a small nonprofit board controls a massive for-profit venture. While it was within its rights to terminate Altman, it has not adequately explained to anyone why it did so.

The schism at OpenAI is of seismic importance: Before Friday, OpenAI was an unstoppable industry leader with the most visible CEO in the industry, and it was backed by one of the world’s largest and most powerful companies. What would OpenAI be without most of its staff? Did Microsoft waste its $13 billion investment or functionally acquire OpenAI for free? Why does OpenAI co-founder and board member Ilya Sutskever now “deeply regret” firing Altman?

Further, this messy breakup has direct consequences for the technology. OpenAI was on the cutting edge of AI development, and its products are used by hundreds of millions of people worldwide. With the company behind it now in disarray, we have to ask: What is the future of ChatGPT? Will a rival outpace it, or will Microsoft build its own version?

Gerald Butts, vice chairman of Eurasia Group, said that the future of AI is somewhat insulated from this dramatic game of musical chairs. “AI development is independent of the personalities involved at this stage,” Butts said. “Overall, this whole episode is a nothing burger.”