Harry

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 Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our&nbsp;<a href="https://tokenist.com/terms-of-service/" style="text-decoration:underline;color:#3c7b7b" target="_blank" rel="noreferrer noopener" class="deco-link">website policy</a>&nbsp;prior to making financial decisions.
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<p class="has-drop-cap">Over the weekend, OpenAI underwent a meltdown. The spearheading AI non-profit captured the world’s attention with its flagship ChatGPT product, eventually unleashing the <a href="https://tokenist.com/these-3-ai-stocks-offer-great-value-but-are-under-the-radar-for-now/" rel="dofollow" class="deco-link">AI investing wave</a>.&nbsp;</p> 
<p>On Friday, OpenAI’s non-profit board, chaired by Greg Brockman, blindsided Sam Altman, the company’s CEO. Out of six, four board members voted to oust the public face of OpenAI. The board setup itself is atypical.</p> 
<p>At the same time as OpenAI is a non-profit organization, it also operates as a for-profit via OpenAI LP, a capped-profit company. This structure was designed to focus OpenAI’s efforts on developing safe artificial general intelligence (AGI) instead of profit maximization.</p> 
<p>Yet, the leading AI startup already broke records in rapid valuation growth, ranging between <a href="https://www.wsj.com/tech/ai/openai-seeks-new-valuation-of-up-to-90-billion-in-sale-of-existing-shares-ed6229e0" target="_blank" aria-label=" (opens in a new tab)" rel="noreferrer noopener nofollow" class="deco-link">$80 billion to $90 billion</a> by September. Given the amount of money involved, the following days turned chaotic, proving the organizational setup a failure.</p> 
<p>Just as investors and OpenAI personnel turned to support the ousted Sam Altman, the board appointed Twitch co-founder Emmett Shear to serve as interim CEO on Sunday. In the meantime, Microsoft’s (NASDAQ: MFST) Satya Nadella harnessed the board’s floundering in his favor.</p> 
<h3 id="nadella-s-4d-chess-move-yet-unrealized">Nadella’s 4D Chess Move, Yet Unrealized</h3> 
<p>OpenAI grew to 770 employees, of which 738 signed a <a aria-label=" (opens in a new tab)" href="https://twitter.com/rowancheung/status/1726662913564577982" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">letter</a> on Monday stating that the board’s actions constitute a hostile environment.&nbsp;</p> 
<p>In short, the board would have to resign unless it wants to see ~95% of OpenAI staff migrate to Microsoft’s welcoming arms, led by Sam Altman and Greg Brockman.&nbsp;</p> 
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   <p lang="en" dir="ltr">We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners. We look forward to getting to know Emmett…</p>— Satya Nadella (@satyanadella) <a href="https://twitter.com/satyanadella/status/1726509045803336122?ref_src=twsrc%5Etfw" target="_blank" rel="nofollow">November 20, 2023</a>
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<p>As of Tuesday, the deal has not been finalized. After senior computer scientist and board member Ilya Sutskever <a aria-label=" (opens in a new tab)" href="https://twitter.com/ilyasut/status/1726590052392956028" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">flipped his position</a>, only two members remained to do the same. On the hint that Microsoft could effectively take over the leading AI startup without paying, MSFT shares <a href="https://tokenist.com/microsoft-gains-in-premarket-after-openais-ex-ceo-joins-to-lead-new-research-team/" rel="dofollow" class="deco-link">opened nearly 4% higher</a> on Monday, going from $365 to $379 per share.</p> 
<p>Given the number of letter signees, Microsoft CEO Satya Nadella seemingly holds all the leverage. More importantly, could Nadella bring Microsoft to the forefront of the AI revolution?</p> 
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<h3 id="microsoft-s-aggressive-expansion">Microsoft’s Aggressive Expansion </h3> 
<p>Since Nadella took over Microsoft’s reins in February 2014, the software juggernaut crunched 326 deals worth over $170 billion. By far, the largest deal was the acquisition of Activision Blizzard in January 2022, valued at $68.7 billion.&nbsp;</p> 
<p>Given OpenAI’s $80B – $90B valuation range, if nearly all OpenAI employees accept Microsoft’s offer, this would mark modern history’s most cost-efficient talent poaching. Microsoft started investing in the AI startup as early as November 2016.</p> 
<p>At that time, Microsoft AI and Research Group chief Harry Shum <a aria-label=" (opens in a new tab)" href="https://blogs.microsoft.com/blog/2016/11/15/advancing-ambition-democratize-artificial-intelligence/#sm.000074e9018m8crnxek1s6eh0eyeo" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">partnered</a> with Altman to supply the startup with Microsoft Azure cloud computing. Since then, Microsoft has increased its AI bet to <a aria-label="$13 billion (opens in a new tab)" href="https://www.cnbc.com/2023/04/08/microsofts-complex-bet-on-openai-brings-potential-and-uncertainty.html" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">$13 billion</a>.</p> 
<p>In July 2019, Microsoft further <a aria-label=" (opens in a new tab)" href="https://news.microsoft.com/2019/07/22/openai-forms-exclusive-computing-partnership-with-microsoft-to-build-new-azure-ai-supercomputing-technologies/" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">solidified the partnership</a> by becoming the exclusive cloud computing provider. In the meantime, Microsoft commercialized AI hype with the recently launched Microsoft 365 Copilot. The AI assistant can now provide real-time aid across all flagship products such as Word, Excel, Powerpoint, OneNote, Outlook, and Loop.</p> 
<p>Yet, despite promises to “democratize artificial intelligence,” the integration of DALL-E into Microsoft’s Bing Image Creator shows a mixed bag. Although powerful and groundbreaking, the feature is aggressively censored to the point of <a aria-label=" (opens in a new tab)" href="https://twitter.com/MParakhin/status/1714291576191717693?s=20" target="_blank" rel="noreferrer noopener nofollow" class="deco-link">crippling user experience</a>.</p> 
<p>Perhaps Microsoft’s proclivity to overly control is why Sam Altman is still trying to return as OpenAI CEO. While Nadella may be quick-thinking and business savvy, Microsoft’s overbearing legacy appears to remain untouched. This itself may not turn out so business-savvy in the open-source AI era.</p> <iframe src="https://tokenist.substack.com/embed" width="100%" height="320" style="border:1px solid #EEE; background:white;" frameborder="0" scrolling="no"></iframe> 
<p><strong><em>Do you think “AI safety” largely translates to arbitrary censorship, so regular people have limited access to powerful tools? Let us know in the comments below.</em></strong></p> 
<p>The post <a rel="nofollow" href="https://tokenist.com/will-nadellas-crafty-move-amid-the-openai-crisis-pay-off/">Will Nadella’s Crafty Move Amid the OpenAI Crisis Pay Off?</a> appeared first on <a rel="nofollow" href="https://tokenist.com">Tokenist</a>.</p>

Will Nadella’s Crafty Move Amid the OpenAI Crisis Pay Off?

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