The decision by the board of OpenAI to fire CEO Sam Altman “triggered a Silicon Valley corporate drama”, says Dan Milmo in The Guardian. He is the CEO of the company behind the ChatGPT artificial intelligence chatbot and “the figurehead of a revolution in AI that has enthralled the public and investors but also alarmed industry insiders and experts”.
With OpenAI’s staff in “uproar” and threatening to quit, investors, led by Microsoft, attempted to reinstate Altman, only for Microsoft to decide a few days later to hire him to lead a new AI division.
There then followed a “dramatic reversal”, says the Financial Times. Just two days later, it was announced that Altman would return as CEO of the firm that he co-founded. He will be under the supervision of a new board of directors, including former US Treasury Secretary Larry Summers and former Salesforce CEO Bret Taylor. This draws a line under a stand-off that has seen almost all of the company’s workers line up against the original four-person board.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
OpenAI's unusual corporate governance structure
Rumours and speculation relating to the sacking abound, says James Titcomb in The Telegraph. However, the key reason is that while the main part of the start-up, originally a non-profit, was moved to a profit-making subsidiary that could give employees shares and raise money, the original board still has ultimate control. This created an inevitable conflict between the board, which has “become increasingly focused on the risks arising from a commercial influence over AI” and Altman, who concentrated on “growing the technology at pace”.
This governance structure also helps explain why “a group of just four people could make decisions that have rocked a multi-billion dollar technology business”, says the BBC. OpenAI is widely deemed the most important AI firm in the world. The ructions could prove damaging to its reputation.
“OpenAI can’t be the same company it was, Nick Patience of S&P Global Market Intelligence told the BBC. “That has implications not only for potential investors but also for recruitment”.
The drama erupted at a key moment for the company. At the beginning of November, ChatGPT hit a milestone of 100 million weekly users and the company had been working on plans to sell shares at an $86bn valuation, as Lex pointed out in the FT. But with or without Altman, the company’s valuation looks a stretch, says Anita Ramaswamy on Breakingviews. It’s not just the governance structure, but the fact that its AI still needs work.
Recent research suggests that the quality of the GPT-4 model has deteriorated. Its accuracy rate in identifying prime numbers slumped from 84% in March to 51% in June. And government regulation could eventually “dramatically change the usage” of AI, adds Breakingviews. Nor are rivals standing still, says Simon Hunt in The Spectator. Amazon and Google have both invested in a rival AI firm, Anthropic, while Google and X (formerly Twitter) have come up with chatbots known respectively as Bard and Grok.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Related articles
- How to invest in ChatGPT and other AI tech changing the world
- 3 ways to play the artificial intelligence boom
- The jury's out on the AI summit at Bletchley Park
-
A junior ISA could turn your child’s pocket money into thousands of poundsPersuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
-
Cost of Christmas dinner jumps 6.5% as grocery price inflation rises againThe average Christmas dinner for four now costs £32.57 as grocery price inflation increases - but what does it mean for interest rates?
-
Share buybacks rise in the UK – what effect will it have?Share buybacks are gaining popularity in the UK – good news for investors
-
Is now the time to buy Marshalls?Former market darling Marshalls, a landscaping and building products supplier, looks too cheap. Is it time to buy this once-admired stock?
-
Top UK stocks with healthy cash flows and dividend yieldsThree promising UK stocks according to Alan Dobbie, co-manager, Rathbone Income Fund
-
Warren Buffet invests in Domino’s – should you buy?What makes Domino's a compelling investment for Warren Buffet's Berkshire Hathaway, and should you buy the UK-listed takeaway pizza chain?
-
4Imprint makes a strong impression – should you buy?4Imprint, a specialist in marketing promotional products, is the leader in a fragmented field
-
Invest in Glencore: a cheap play on global growthGlencore looks historically cheap, yet the group’s prospects remain encouraging
-
How to save the dying UK stock marketThe UK stock market is in long-term decline. To fix that, we must first recognise why equity markets exist and who they should serve
-
Should you invest in Trainline?Ticket seller Trainline offers a useful service – and good prospects for investors
