7 Things To Know About OpenAI’s Turmoil And Its Ex-CEO (Potentially) Joining Microsoft

CRN provides an in-depth roundup of the dramatic series of events around OpenAI’s firing of CEO Sam Altman, who is joining Microsoft to lead a new AI research team but could find his way back to his old position due to many employees reportedly threatening to leave the generative AI firm.

In less than 60 hours, Sam Altman went from getting fired as CEO of OpenAI, the high-flying generative AI firm behind ChatGPT, to getting hired to lead a new AI research organization at the company’s top backer, Microsoft, and legions of former colleagues may follow him there.

The dizzying and dramatic series of events played out between Friday afternoon, when Altman’s ouster at OpenAI was announced, and early Monday morning, when Microsoft named him and fellow OpenAI co-founder Greg Brockman as the leaders of a new research organization there.

But the twists and turns may not be over. As of Monday mid-afternoon, a report said there is a chance Altman and Brockman could be reinstated as OpenAI’s leaders after an initial effort to bring them back fell through on Sunday night. This emerged after Microsoft announced its plans to hire them.

While Microsoft CEO Satya Nadella said his company remains committed to its partnership with OpenAI—which kicked off a frenzy of generative AI hype and spending by businesses with the launch of ChatGPT a year ago—the current events have sent shockwaves throughout the tech industry, with the future of one of the world’s top valued private startups now mired in uncertainty.

Before a Monday afternoon report said that Altman and Brockman, OpenAI’s former president, could return to the company, the organization had appointed Emmett Shear, co-founder and former leader of Amazon-owned streaming platform Twitch, as the startup’s interim CEO.

But most of the company’s employees have reportedly said they will resign if Altman isn’t reinstated as OpenAI’s CEO and the existing board stays in place. The dissenters include one of the board directors behind Altman’s ouster, OpenAI co-founder Ilya Sutskever, who has since voiced his regret in firing his colleague.

A Microsoft representative referred CRN to public statements made by Nadella vowing its commitment to OpenAI and hiring Altman and Brockman for the new AI research team but did not comment on their potential return to OpenAI.

OpenAI did not respond to a request for comment.

What follows are seven things to know about the stunning series of events, from Altman’s ouster at OpenAI to his appointment at Microsoft, as well as the broader context around the events, including the symbiotic relationship between OpenAI and Microsoft and how OpenAI has evolved over the years.

Why OpenAI And Microsoft Are Important To Each Other

Over the past year, OpenAI and Microsoft have enjoyed a symbiotic relationship, with the latter getting access to OpenAI’s large language models to power new generative AI products and the former receiving funding and access to GPU-powered infrastructure to power development and operations.

Almost a year ago, OpenAI sent shockwaves throughout the tech industry when it released ChatGPT, a cloud-based chatbot that provides convincing responses to a vast array of inquiries using the firm’s GPT-3 large language model trained on a massive set of data.

While ChatGPT didn’t always provide accurate answers, its ability to generate all sorts of text—from blog posts to movie scripts, and even code for software applications—impressed enough people that businesses realized that generative AI could disrupt every industry, prompting a frenzy of spending in GenAI technologies to create new products and augment operations.

For Microsoft, this meant doubling down on its investment in OpenAI with a multi-year, multibillion-dollar deal. Announced in January, the tech giant said the investment would maintain Azure as the exclusive cloud service provider for OpenAI’s workloads and allow the two companies to scale up AI computing infrastructure and create new AI-powered experiences.

Since then, Microsoft has rolled out several new products and services powered by OpenAI’s models. This includes Microsoft’s new flagship generative AI service, Copilot, which uses OpenAI’s GPT-4 among other large language models to help users with productivity and creativity.

For Microsoft, this has meant OpenAI has been critical to the company’s ability to compete on the generative AI front while rivals like Amazon Web Services and Google invest in internal capabilities and OpenAI competitors try to stay ahead.

The recent turmoil around OpenAI has prompted more than 100 customers to contact the firm’s rivals, including Google-backed Anthropic and a startup called Cohere, The Information reported Monday.

The Timeline: Altman Gets Fired, Microsoft Vows Support For OpenAI

Just before 3:30 p.m. Eastern Time on Friday, OpenAI’s board of directors announced that Sam Altman (pictured) would depart the startup as CEO after more than four years in the role because it “no longer has confidence in his ability to continue leading OpenAI.”

In a statement posted to its website, the organization said the decision followed a “deliberate review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities.”

Notably, Altman was on OpenAI’s board, as was fellow co-founder and OpenAI President Greg Brockman, who stepped down as its chairman “as part of this transition,” the board said.

The other board directors consist of OpenAI Chief Scientist and co-founder Ilya Sutskever and three independent members: Quora CEO Adam D’Angelo, technology entrepreneur Tasha McCauley, and Georgetown Center for Security and Emerging Technology’s Helen Toner.

OpenAI said CTO Mira Murati would serve as interim CEO, effective immediately.

Less than three hours later, Microsoft CEO Satya Nadella posted on X, the social network formerly known as Twitter, and said his company remains “committed” to its partnership with OpenAI as it has a “long-term agreement” granting “full access to everything” the tech giant needs for its product road map.

“Together, we will continue to deliver the meaningful benefits of this technology to the world,” he wrote in the post without mentioning Altman, who shared the stage with Nadella less than two weeks prior.

Roughly half an hour later, Brockman posted a message on X that he is quitting OpenAI after “learning today’s news” about Altman’s firing.

Brockman had posted the message with a quote of Altman saying on X, an hour after his firing was announced, that he “loved” his time at OpenAI and would have “more to say about what’s next later.”

Later that night, Brockman said Altman was informed Thursday night by his fellow board directors, minus Brockman, that he was being fired as OpenAI’s CEO. A few minutes before OpenAI announced Altman’s firing online on Friday, Brockman was informed of the decision as well as the board’s decision to remove Brockman from the board, according to his telling of the events.

Altman also posted Friday night, saying that if he “start[s] going off,” OpenAI’s board “should go after me for the full value of my shares.”

In the meantime, three senior researchers at OpenAI resigned in the wake of Altman’s and Brockman’s sudden departures, according to The Information.

How OpenAI Operates: A Nonprofit That Governs For-Profit Venture

OpenAI was founded as a nonprofit organization in 2015 by Sam Altman, Elon Musk and other tech bigwigs such as LinkedIn founder Reid Hoffman and PayPal founder Peter Thiel. Cloud giant Amazon Web Services and global consulting behemoth Infosys were also involved in its formation.

OpenAI’s founders said they started the organization to “advance digital intelligence in the way that is most likely to benefit humanity as a whole, unconstrained by a need to generate financial return.”

“Since our research is free from financial obligations, we can better focus on a positive human impact,” OpenAI said in a blog post authored by co-founders Greg Brockman and Ilya Sutskever, who would find themselves at odds over the organization’s future eight years later.

The organization would go on to develop cutting-edge technologies pushing the limits of AI capabilities, including a virtual world called RoboSumo where humanoid robot agents learn how to move their bodies throughout a space with the goal of pushing each other out of a sumo ring.

But by early 2018, Musk had grown concerned that OpenAI had fallen behind Google in AI research capabilities and proposed taking over the firm, according to a 2023 report by news outlet Semafor.

The proposal was rejected by Altman and OpenAI’s other founders, which prompted Musk to leave the firm and claim he was doing so over a conflict of interest with his electric vehicle company, Tesla, which was developing AI technology for autonomous driving.

With a need to cover the skyrocketing costs of AI computing and accelerate AI research, the nonprofit announced in 2019 that it was forming a for-profit venture, which it would control, that could raise capital from investors and offer employees startup-like equity. It noted that there was no precedent for an organization to operate as a “hybrid of a for-profit and nonprofit.”

“We want to increase our ability to raise capital while still serving our mission, and no pre-existing legal structure we know of strikes the right balance,” wrote Brockman and Sutskever in a blog post.

The nonprofit set up the for-profit venture as a “capped-profit” entity, which means that any profits the latter firm makes above a certain threshold are given back to the nonprofit.

If successful, the firm said, it expected to “generate orders of magnitude more value than we’d owe to people who invest in or work at” the for-profit venture.

Altman, who previously served as president of startup accelerator Y Combinator from 2014 to 2019, became CEO of the for-profit venture, which is known officially as OpenAI LP. He held the role until his fellow board directors except for Brockman voted to fire him.

The Timeline: OpenAI Seeks But Fails To Reinstates Altman As CEO

Despite issuing a harsh statement about Sam Altman on Friday, OpenAI’s remaining board directors were reportedly exploring the possibility of reinstating the ousted leader as CEO by Saturday.

Citing multiple unnamed sources, The Verge reported that the board had opened discussions with Altman about his return, though the fired CEO was apparently “ambivalent” about the move.

Underlying the board’s consideration was a growing concern that many of OpenAI’s employees would resign if Altman and Greg Brockman weren’t reinstated and if the existing board stayed in place.

A handful of OpenAI senior researchers had already resigned on Friday and other employees were showing public signs of support for Altman in the hours after his ouster.

Later, on Monday, it emerged that around 500 OpenAI employees had signed a letter stating they would resign unless Altman and Brockman return and the board’s remaining directors resigned, according to multiple reports. Among the signatories was co-founder and Chief Scientist Ilya Sutskever, one of the directors who moved to oust Altman and remove Brockman from the board.

Mere hours later, the number of OpenAI employees threatening to quit had grown to almost 700 out of the firm’s 770-staff headcount, multiple reporters said.

But it was too late for OpenAI’s board to satisfy employee demands. After initially agreeing to bring back Altman and Brockman and replace OpenAI’s remaining board directors, the board waffled and the deal to make it all happen fell apart Sunday night, The Verge reported on Monday at 12:21 a.m. Eastern Time.

The Timeline: Microsoft Hires Altman And Brockman To Lead AI Research Team

A few hours after OpenAI’s board failed to bring back Sam Altman and Greg Brockman, Microsoft CEO Satya Nadella (pictured) announced on X just before 3 a.m. Eastern Time on Monday that his company hired the two to “lead a new advanced AI research team.”

Brockman added that Microsoft’s AI research team would also be led by other senior staffers leaving OpenAI: Jakub Pachoki, head of development for the GPT-4 large language model; research scientist Syzmon Sidor; and Aleksander Madry, head of preparedness.

According to the letter signed by OpenAI employees threatening to quit, Microsoft had “assured” them that “there are positions for all OpenAI employees at this new subsidiary should we choose to join.”

In addition to announcing the new AI research team, Nadella said in the same X post that Microsoft remains “committed to our partnership with OpenAI.” He added that the company has “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.”

Behind the scenes, Microsoft and other OpenAI investors had been pressing OpenAI to do what many employees had sought: reinstate Altman as CEO and replace the existing board, according to Bloomberg. The news outlet said Nadella himself was blindsided by the board’s ouster of Altman and that he offered to support the fired CEO whatever Altman ended up doing next.

With OpenAI failing to reinstate Altman as CEO, the firm’s board made another decision to drop CTO Mira Murati as interim leader and replace her with Emmett Shear, who had been the former CEO of Amazon-owned streaming service Twitch since its founding in 2011.

In a post to X, Shear called OpenAI “one of the most important companies currently in existence” and said his top priority “will be to make sure we continue to serve all our customers well.”

The interim CEO said he has a three-point plan for OpenAI’s next 30 days: hire an independent investigator to probe how events unfolded; get as much feedback as possible from employees, partners, investors and customers; and “reform the management and leadership team.”

Hours after Microsoft announced its hiring of Altman and Brockman, OpenAI co-founder and board director said he “deeply” regrets his “participations in the board’s actions.”

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

Murati also indicated the importance of employees to OpenAI.

“OpenAI is nothing without its people,” she wrote.

OpenAI Staff Vow To Keep ChatGPT, Other Services ‘Stable And Reliable’

OpenAI employees took to social networks X and LinkedIn on Monday to say that the firm is “continuing to prioritize stability and security of our systems,” including ChatGPT, in wake of the turmoil facing the company following the firing of Sam Altman.

“Despite a moment of uncertainty, our commitment to developers remained steadfast,” Logan Kilpatrick, who works in developer relations for OpenAI, said in a post.

“In the meantime, please know that we are continuing to prioritize stability and security of our systems. Our engineering team remains on-call and actively monitoring our services,” he added.

Sherwin Wu, another employee, said staff “have actually stepped up to ensure duplicate on-call coverage during this time to make sure the customer experience is still stable and reliable.”

The Timeline: Altman And Brockman May Still Return To OpenAI?

Nearly 12 hours after Microsoft CEO Satya Nadella said that Sam Altman and Greg Brockman would join his company, a new report emerged saying that the two executives could still return to OpenAI over fears that most of the ChatGPT maker’s employees could leave over their departure.

The Verge reported just before 2 p.m. Eastern Time on Monday that it’s a possibility due to most of OpenAI’s employees threatening to quit if Altman and Brockman aren’t reinstated as the firm’s leaders.

Staff also want to see OpenAI’s remaining three board directors replaced, a push that is reportedly supported by one of the directors, co-founder and Chief Scientist Ilya Sutskever, who had publicly voiced regret over his decision to fire Altman Monday morning.

The Verge said a Monday afternoon post to X by Altman was a reference to hopes that he and Brockman can return to OpenAI and, as a result, retain the firm’s employees.

“We have more unity and commitment and focus than ever before. We’re all going to work together some way or other, and I’m so excited,” he wrote, adding “one team, one mission.”

Microsoft declined to comment on the report.