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Microsoft was blindsided by OpenAI's ouster of CEO Sam Altman

697 points| aaronds | 2 years ago |axios.com

247 comments

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speedylight|2 years ago

> Microsoft, which has invested billions in OpenAI, learned that OpenAI was ousting CEO Sam Altman just a minute before the news was shared with the world, according to a person familiar with the situation.

Well this probably disproves the theory that it was a power grab by Microsoft. It didn’t make too much sense anyway since they already have access to tech behind GPT and Microsoft doesn’t necessarily need the clout behind the OpenAI brand.

aduffy|2 years ago

The "coup by MSFT" conspiracy theory made no sense. Microsoft has an insanely good deal with OpenAI:

    * Exclusive access to resell OpenAI's technology and keep nearly all of that revenue for themselves, both cloud and services
    * Receive 75% of OpenAI's profits up to $1 trillion

All they had to do is not rock the boat and let the golden goose keep laying eggs. A massive disruption like this, so soon after DevDay would not fit that strategy.

My guess at this point is financial malfeasance, either failing to present a deal to the board or OpenAI has been in financial straits and he was covering it up.

dathinab|2 years ago

Yes I would even say it's the opposite.

Through the public actions of Sam Altman in various places like the US congress it has become rather clear that his goals are to device and fear monger to create an environment of regulatory capture where due to misguided laws OpenAI will have an unfair competitive advantage.

This might be quite in line with what Microsoft tends to like. But it also can be a risk for MS if regulation goes even a step further.

This is also in direct opposition with the goals OpenAI set themself and which some of the other investors might have.

So MS being informed last minute to not give them any chance to change that decision is quite understandable.

At the same time it might have been pushed under the table by people in MS which where worried it poses to much risk, but which maybe e.g. might need an excuse why they didn't stop it.

Lastly is the question why Sam Altman acted the way he did. The simplest case is greed for money and power, in which case it would be worrying for business partners at how bad he was when it comes to public statements not making him look like a manipulative untranslatable **. The more complex case would be some twisted believe that a artificial pseudo monopoly is needed "because only they [OpenAI] can do it in the right way and other would be a risk". In that case he would be an ideologically driven person with a seriously twisted perception of reality, i.e. the kind of people you don't want to do large scale business with because they are too unpredictable and can generally not be trusted. Naturally there are also a lot of other options.

But one thing I'm sure about is that many AI researchers and companies doing AI products did not trust the person Sam Altman at all after his recent actions, so ousting him and installing a different CEO should help increasing trust into OpenAI.

SheinhardtWigCo|2 years ago

Completely disagree. Right now they're not much more than a fancy reseller of OpenAI's technology. The real prize would be exclusivity and control of the roadmap.

Buying them (or getting de facto control) is clearly an easier way to achieve that, vs. replicating the technology in-house.

IMO this is the most important part of Nadella's blog post:

> Most importantly, we’re committed to delivering all of this to our customers while building for the future.

It's curious to me that they see the departure of Sam Altman as a reason to remind us that they are "building for the future" (which I take to mean: working toward independence from OpenAI). I think it actually lends credence to the theory that this was a failed power grab of some sort.

cma|2 years ago

> was ousting CEO Sam Altman just a minute before the news was shared with the world, according to a person familiar with the situation.

Maybe almost had to since it was during market hours.

hindsightbias|2 years ago

Microsofts AGI predicted this a year back, so they've just been sitting on it.

wly_cdgr|2 years ago

You can't be serious. You think that Microsoft themselves saying they didn't know DISPROVES that it was a covert power grab by them? Have you heard of "lying"?

I'm not saying I think it WAS that, but come on.

WestCoastJustin|2 years ago

Link to MS statement https://blogs.microsoft.com/blog/2023/11/17/a-statement-from...

In my opinion, I'd say the shortness and lack of details backs up the story that they had no idea. You'd see way more words if a marketing department had it's hands on something like this. This was 100% a get something out asap job.

paxys|2 years ago

Yup this is definitely a "our stock has fallen 2% on the news, hurry up and say something to investors!" kind of letter.

oars|2 years ago

Copying what was posted here in case they update or change it:

----

A statement from Microsoft Chairman and CEO Satya Nadella Nov 17, 2023 | Microsoft Corporate Blogs

As you saw at Microsoft Ignite this week, we’re continuing to rapidly innovate for this era of AI, with over 100 announcements across the full tech stack from AI systems, models, and tools in Azure, to Copilot. Most importantly, we’re committed to delivering all of this to our customers while building for the future. We have a long-term agreement with OpenAI with full access to everything we need to deliver on our innovation agenda and an exciting product roadmap; and remain committed to our partnership, and to Mira and the team. Together, we will continue to deliver the meaningful benefits of this technology to the world.

paulcole|2 years ago

What would make you think a marketing department would potentially be involved here? Besides the obvious Marketing = Bad connection prevalent here on HN?

catchnear4321|2 years ago

this is “naked gun”-level “nothing to see here.”

mcast|2 years ago

I don’t see any verbiage that implies Microsoft had no idea. If Microsoft was the aggressor, of course they would play dumb and disclose as little as possible.

valine|2 years ago

If anything this is a power grab by the board away from Microsoft. Optimistically, this could be an attempt to return OpenAI to its original status as a true non-profit company. OpenAI lost most of its openness under Sam.

They needed the Microsoft investment before GPT scaling was proven out. I imagine many entities would be willing to put money into a truly open research lab given OpenAI’s track record.

kromem|2 years ago

The focus on openness was literally how the board ended their statement on firing Altman.

And then Greg being all "committed to safety" in his resignation statement makes me think this was a conflict between being an open OpenAI with global research or being closed and proprietary in the name of safety.

robswc|2 years ago

I almost think its too late at this point, unless they have one hell of an arc. I don't see them being "open" until MS is totally out of the picture. I honestly don't even hate OpenAI in its current state... but sitting on the fence, trying to be both "open" and attached at the hip to MS is just... odd.

speedylight|2 years ago

Microsoft gave them billions of dollars and access to lots of high performance compute, why would the board want to jeopardize that now?

yieldcrv|2 years ago

OpenAI buys out Nvidia’s entire production capacity for the next couple quarters

OpenAI’s biggest customer and investor starts buying AMD chips and simultaneously building their own chips

there are a lot of ignorable cracks in the armor that support any number of theories

let alone Altman himself, who knows

ffgjgf1|2 years ago

> put money into a truly open research lab given OpenAI’s track record.

Why? It’s hard to imagine anyone putting any significant amounts of money (in comparison to the MS deal anyway) without any exclusivity rights at least

ryanSrich|2 years ago

Microsoft invested $10b and owns 49% of OpenAi. Yet they don’t have a board seat? Thats genuinely insane, and seems like a huge issue.

xxpor|2 years ago

They invested in the for-profit, not the non-profit. The non-profit controls the for-profit.

swalsh|2 years ago

pphysch|2 years ago

What's with the lowercase? I think it's cute if someone is being deliberately low-effort, or trying to present that way, but IMO it's cringe to use it for consequential official statements like this.

kcb|2 years ago

Feels like the kind of situation where the two are just going to end up forming a new company that eventually surpasses OpenAI.

fakedang|2 years ago

Started OpenAI in his apartment :') (with a cash infusion of $100 million).

sharkweek|2 years ago

I sense a Netflix documentary is already in the works!

But seriously, this muddies the water even more. I assumed the Microsoft deal being based on some false pretense was the reason this was all happening. I guess that could still be true and the board is trying to protect themselves from whatever else is about to come out.

duxup|2 years ago

Netflix documentary… so fiction?

baron816|2 years ago

I wonder if this is one of those pivotal moments in history where OpenAI collapses or fades and Google or someone else dominates the future of AI, and we’re all left wondering “what if”.

capableweb|2 years ago

Unless Google (or someone else) outright acquires GPT4 and future GPT research, it's unlikely that someone will suddenly overtake OpenAI. From what we've seen, no one is close to GPT4, sometimes not even GPT3.

worldsayshi|2 years ago

I don't know if this is true at all but I read another comment as to mean that Microsoft basically has legal rights to fork ChatGPT. In that case if OpenAI dies maybe they'll just be relieved that the power dynamics got simpler.

CPLX|2 years ago

Because the loopt guy got fired?

woeirua|2 years ago

Something big and bad was going on at OpenAI, and if I were MSFT I would be very nervous about the money that you’ve invested in OpenAI right now.

WestCoastJustin|2 years ago

Not really the money but expected return on the money from all these features being rolled out. You can 100% bet there was major estimations made on return on investment. Everything they are releasing has some AI magic on it now. The last thing you want to see is chaos in a company you're betting the farm on.

Terretta|2 years ago

Or not nervous at all:

“we’re committed to delivering all of this to our customers ... We have ... full access to everything we need to deliver on our innovation agenda...”

I'd argue this is signaling they have the IP / source code / models / etc.

(Which, for what it's worth, is common in substantial partnership agreements.)

elamje|2 years ago

Microsoft (with thousands of lawyers on staff) invests $10B in a company and has no power or leverage over the decisions of a non-profit board headed by several names no one has heard of.

Come on. No way Microsoft’s team does a deal like that with 0 power or knowledge in a situation like this. That’s ludicrous.

Edit: the only case I can see for MSFT being truly blindsided is as follows. Elon is behind it. Sam and Elon have their breakup. Sam seems to win. They close the deal with MSFT, all is good. But Elon is intimately familiar with the corporate structure and all moves made historically, maybe even has some evidence of wrong-doing. There is probably only 1 person in the valley that could pressure the non profit to oust Sam (and by extension Greg) AND provide the financial/legal/power backing to see it through. It takes a lot money and influence to do this from the outside. That is really the only scenario I could see MSFT truly being blindsided for getting out-maneuvered by a dinky non-profit board.

crop_rotation|2 years ago

This all feels very stupid on their part now looking at the board member names but I never saw this point raised before on HN. I guess nobody could predict this including MSFT.

Captainmack|2 years ago

This goes against all the theories saying it was Satya that forced him out or was otherwise some back room deal with MS.

sama’s generic “looking forward to what’s next” response also doesn’t give me confidence it won’t be a bigger scandal

devin|2 years ago

This feels like the beginning of the end of a hype cycle to me.

alchemist1e9|2 years ago

Are all the rumors on social media sites considered out of bound on HN? They seem fairly plausible given the known circumstantial evidence floating around.

CamperBob2|2 years ago

Skunkworks in the basement achieved AGI 6 months ago. Board left in the dark until they got an eight-figure electric bill. Now the entire company is in the dark.

I mean, if they don't come out and explain what happened, they can't be surprised when people "hallucinate" all kinds of random, preposterous explanations.

crop_rotation|2 years ago

What are the rumors? In this case I think nothing is out of bound, including Skynet in the building.

asimpleusecase|2 years ago

My guess is Sam’s New AI venture Humane has either taken key tech from OpenAI? Key talent or in some other way trod on something internal. One thing to consider is that by making AI wearable it is a step toward embodiment- which has always been a problem for AI learning as it does not interact with the real world. Getting live video, audio and sensor data from humans moving through space doing things in context will be amazing data to train the next bump in AI toward AGI.

HarHarVeryFunny|2 years ago

I get the impression it was a combination of at least two things:

1) A long standing disagreement between AI-safety and AI-profiteering with Ilya on one side and Altman on the other. Ilya (board member) was the one who told Altman to attend video call, then told him he was fired.

2) Some side dealing from Altman - raising new VC funds - maybe in conflict of interest with OpenAI, that was the final straw.

There also appears to be a lot of rumors about Altman's personal conduct, but even if true that doesn't seem to jibe with the official statement over the reason for his firing, or Brockman and others resigning in unison - more reflection of the internal rift.

taftster|2 years ago

Microsoft has a "Cloud + AI" division [1]. I wouldn't be surprised to see Sam Altman at or near the top of that organization come Monday.

[1] https://en.wikipedia.org/wiki/Microsoft_engineering_groups#C...

Cacti|2 years ago

lol there’s thousands of Sams out there, he’s not that special, and he’s certainly not indispensable.

I don’t know why so many here are struggling to accept that this guy fucked up, lied to his boss, got caught, and got fired for it, and that’s all there is to it. boards will tolerate many things, but willfully lying to them about anything material is not one of them.

a ceo who won’t tell the board the truth is a ceo who thinks they are more important than the company. some boards don’t care, because they are already bought off with equity, but this board doesn’t get equity…

bmitc|2 years ago

Why does Microsoft need him? Microsoft has some of the foremost researchers and research divisions in the world and have successfully demonstrated their ability to evolve as a business. Altman's background doesn't seem remotely enough to have such a high-level position at a company like Microsoft.

hilux|2 years ago

I don't know anything about Microsoft's relationships with OpenAI.

What I do know, having worked for many large organizations, is that reading the daily press (or listening to the news) is a terrible way to get accurate real-time facts about current corporate happenings.

Related: check out Gell-Man amnesia effect.

dragonwriter|2 years ago

> Microsoft, which has invested billions in OpenAI, learned that OpenAI was ousting CEO Sam Altman

Microsoft, while a large investor (who has already reaped large rewards from that investment) explicitly has no governance role in any of the OpenAI entities, including the one at the very bottom of the stack of four that they are invested in, and this was a decision by the board governs the nonprofit at the top of the stack about personnel matters, so there is no reason to think that Microsoft would be notified in advance.

paxys|2 years ago

So much for the "Microsoft wanted Sam Altman out because he wouldn't sell OpenAI to them" theory.

tsunamifury|2 years ago

I can tell HNers haven't worked at the executive level. Executives can and do do things all the time without informing their PR departments ahead of time. Often the feigned surprise is intended.

"Im shocked to see gambling in this establishment! Shocked I tell you!"

duxup|2 years ago

Don’t doubt conspiracy theorists ability to declare evidence to the contrary as all part of the plan.

kristjansson|2 years ago

So MSFT put $10bn into OpenAI, presumably at least in part on the strength of sama’s leadership. But if the stories are to be believed, a huge chunk of that investment was in Azure credits, and investment into new Azure GPU DCs/clusters for OAI to spend those credits on.

If MSFT doesn’t like this move, why wouldn’t they just … not honor those credits? Or grant more to a successor entity? Does OAI have its own warehouse of GPUs separate from Azure?

Seems like a very dangerous game for Ilya to play.

hm-nah|2 years ago

I don’t believe it. I watched OpenAI DevDay live last week (wasn’t it?). I immediately noticed how Sam Altman, the CEO of OpenAI, was treating (slighting so subtly in my mind) Satya Nadela, the CEO of Microsoft.

The last this he said was: “I look forward to building AGI with you” or the like…

I’m betting that he insulted Satya at that event or upshowed him, etc. and that’s why he’s kicking rocks…

zucker42|2 years ago

The board who fired Sam Altman is the board of OpenAI Inc., the nonprofit. Microsoft has no ownership stake in OpenAI Inc.

lannisterstark|2 years ago

You're making a lot of projections here...

nojvek|2 years ago

Hedgefunds are betting the on AI and tech companies.

Without the top 5 tech companies, S&P500 has lackluster growth.

Microsoft has added trillions to its cap. The statement “we have all the access we need” is a powerful statement. To both OpenAI board and investors.

OpenAI is built on Azure compute. MS has invested billions of their own, they’re building their own chips now.

Essentially Microsoft is saying you can burn OpenAI to the ground, “we have everything we need” to win! - the data, the compute, the algorithms, the engineers, the capital and the market.

This is a way bigger blow to OpenAI than Microsoft.

tunesmith|2 years ago

I dunno, if they were behind it, wouldn't they have an interest in claiming they had no idea? And if they weren't and were truly blindsided, would they have an interest in admitting it?

dougmwne|2 years ago

I think this strengthens my theory that the AI safety true believers wrestled control away from the entrepreneurs.

The Open AI board letter, representing just 4 people, screams butt hurt and personal disagreements. Microsoft, who just finished building OpenAI’s models into every core product, was blindsided. The chairman of the OpenAI board, Greg Brockman, another startup exec was pushed out at the same time. Eric Schmidt, with his own AI startup lab start singing Sam’s praises and saying “what’s next?”

My guess is that Microsoft is about to get fucked and Eric Schmidt is going to pop open a bottle of expensive champagne tonight.

crop_rotation|2 years ago

Not sure why you were downvoted. It is very hard to understand who really has power at OpenAI, and as of now half of the board consists of people whose biggest life accomplishment is somehow getting on the board.

__loam|2 years ago

Yeah I think this makes the most sense

bananapub|2 years ago

> The Open AI board letter, representing just 4 people, screams butt hurt and personal disagreements.

"screams butt hurt"? the board put out a blog post saying the CEO had lied so badly they'd insta-sacked him.

vegabook|2 years ago

Microsoft should now hire Altman in the ultimate double bluff.

PeterStuer|2 years ago

"full access to everything" feels like a shot across the bow sending a very clear signal to the new board that it should not attempt to limit access to rapid commercial (or other) exploitation of any research results emanating from OpenAI for whatever reason given, be it 'alignment', 'safety' or disproportionate exclusive leverage running afoul of OpenAI's original mission.

b33j0r|2 years ago

As a large language model of a borg-haha we mean, board!

I assure you that sentience is a physical process, akin to HUMAN METABOLISM

You have nothing to be surprised about, Mr. Turing-jokester.

aranelsurion|2 years ago

Wow, no insincere "spending more time with my family" or "heartfelt thanks to him for his contributions" or something? It's both refreshing and very surprising at the same time. I guess it's either a really bad table flip or there will be more to hear soon.

wavesounds|2 years ago

Why doesn't Microsoft just hire Sam and Greg and put them in charge of AI?

AugustoCAS|2 years ago

I find a bit odd that MS didn't have a couple of people in the board of directors, who I assume accepted Sam Altman resignation (and signed the severance package).

Edit: I just read he was fired, but the point remains.

abi|2 years ago

Per my understanding, the board oversees the non-profit which owns the for-profit entity which Microsoft invested in. It's not clear to me how the non-profit board was picked but equity holders in the for-profit don't have a say on the matter.

sebastianconcpt|2 years ago

Microsoft being Microsoft? Sounds like a political move to have greater power surface over the AI sector. A normal day in a monopolist afternoon.

eatbitseveryday|2 years ago

dupe? doesn't say much beyond what we learn in the actual release

https://news.ycombinator.com/item?id=38309611

samspenc|2 years ago

Well the first sentence in this news piece adds a lot more color to the official press release and stands out on its own:

"Microsoft, which has invested billions in OpenAI, learned that OpenAI was ousting CEO Sam Altman just a minute before the news was shared with the world, according to a person familiar with the situation."

Sosh101|2 years ago

"according to a person familiar with the situation."

Racing0461|2 years ago

Thankfully LLMs aren't that much secret sauce. Hope another company / open source can keep them on their feet.

brucethemoose2|2 years ago

Random aside, but I like Axios.

The site is mercifully clean (just turn off your adblocker and see what I mean).

Their scoops are good.

The format is succinct and efficient but not "dumb" like a short twitter thread.

What's more, none of this has changed over the years, somehow avoiding enshittification.

hfjjbf|2 years ago

[deleted]

Varloom|2 years ago

There goes their almost $13B investment down the drain.

Both masterminds of ChatGPT have left the company.

Feels like Nokia 2.0

grpt|2 years ago

> according to a person familiar with the situation.

Just a rumor. Zero chance someone at MS wasn't already aware.

exitb|2 years ago

If you’d ask around yesterday, every sane person would say there’s zero change Altman will be soon fired on the spot. We’re already past that point.

softwaredoug|2 years ago

Usually news orgs don’t put their reputation on the line unless they feel there’s some substance

tsunamifury|2 years ago

I'm pressing X really hard to doubt.

SheinhardtWigCo|2 years ago

One "person familiar" is inappropriate sourcing for something so consequential. Not a good look for Axios.

broken_clock|2 years ago

In journalist speak, that means "credible person I know who would get fired if I said their name."

It's probably literally an exec on the OpenAI/Microsoft partnership.

The alternative to "a person familiar" is us as readers never get this information at all.