How Microsoft wins after the OpenAI shake-up

Nearly one year after OpenAI launched the popular ChatGPT tool, former CEO and co-founder Sam Altman is heading to Microsoft after a surprise ousting.

Microsoft CEO Satya Nadella announced Monday that Altman, along with former OpenAI President and fellow co-founder Greg Brockman, will lead a generative artificial intelligence (AI) team at the tech giant.

The announcement capped off a weekend of tumultuous news after the OpenAI board of directors fired Altman on Friday evening. Altman’s ouster and Brockman’s decision to follow him could leave Microsoft on the winning side of the turmoil.  

Microsoft invested billions of dollars in OpenAI and worked closely with the company by incorporating ChatGPT into Microsoft products. The company’s partnership with OpenAI kept Microsoft in a leading position in the AI arms race that heated up this year.  

With Altman directly under Microsoft, Wedbush Securities analyst Dan Ives said the company stands to gain more.  

“It makes it a lot cleaner that he’s under them. That’s why I think Microsoft ultimately ends up in a better position than it was Friday,” Ives said.  

Ives said he expects Microsoft to pull ahead of OpenAI in AI innovation with Altman on board, and that Microsoft’s hiring of the “golden child of AI” is “music to the ears of investors.”

Sarah Kreps, professor of government and director of the Tech Policy Institute at Cornell University, said the biggest battle in the AI space right now is over talent.  

“Finding people who are smart, have good ideas and are determined, because everyone’s chasing after the same people, and now Microsoft just got this huge windfall of talent. And so Microsoft’s gain is really OpenAI’s loss at this point,” Kreps said.  

In the immediate aftermath it appeared that OpenAI employees were not happy with the board’s decision to oust Altman. Hundreds of employees signed a letter threatening to leave OpenAI, according to multiple reports, unless Altman and Brockman are reinstated and the board members resign.  

OpenAI’s new interim CEO, former Twitch CEO Emmett Shear, announced Monday he will launch an investigation into the process that led to Altman’s ousting.

Kreps said it will be interesting to see how many OpenAI employees move over to Microsoft. 

“Sam Altman was getting so much attention, and it seems at this point that was for good reason. I mean, the loyalty that he has from his employees is just rare and astonishing. And I wouldn’t be surprised if most of them did follow him to Microsoft,” she said.  

She also said the changing dynamic between OpenAI and Microsoft could change the culture to create a different space to attract new AI talent to the mainstream tech giant, rather than to the up-and-coming OpenAI that was generating immense buzz over the past year.   

The shake-up could also benefit other tech companies looking to hire talent as they build and invest in AI.  

Google launched Bard, a ChatGPT rival, earlier this year and has been competing to get ahead of Microsoft on AI. Amazon in September announced it will invest $4 billion in AI startup Anthropic.

Ives said the OpenAI shakeup is putting the industry in “hunting season.”

“Google, Amazon, Apple and others, they’re going to go after some of these AI engineers and developers that are sought after,” he said. “It does create a bit of an air pocket and some chaos that could benefit some of the large tech players.”

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