Does OpenAI's Origins Explain the Sam Altman Drama?

Tech journalist Kara Swisher disagrees that Sam Altman's (temporary) firing stemmed from a conflict between the 'go-faster' people pushing for commercialization and a rival contingent wanting more safety-assuring guardrails. 'He's being talking about the problems,' Swisher said on CNN. 'Compared to a lot of tech people, he's talking about the problems. I think that's a false dichotomy.'

At the same time, NPR argues, the firing and re-hiring of Sam Altman 'didn't come out of nowhere. In fact, the boardroom drama represented the boiling over of tensions that have long simmered under the surface of the company.'

The chaos at OpenAI can be traced back to the unusual way the company was structured. OpenAI was founded in 2015 by Altman, Elon Musk and others as a non-profit research lab. It was almost like an anti-Big Tech company; it would prioritize principles over profit. It wanted to, as OpenAI put it back then, develop AI tools that would 'benefit humanity as a whole, unconstrained by a need to generate financial return.'

But in 2018, two things happened: First, Musk quit the board of OpenAI after he said he invested $50 million, cutting the then-unknown company off from more of the entrepreneur's crucial financial backing. And secondly, OpenAI's leaders grew increasingly aware that developing and maintaining advanced artificial intelligence models required an immense amount of computing power, which was incredibly expensive.

A year after Musk left, OpenAI created a for-profit arm. Technically, it is what's known as a 'capped profit' entity, which means investors' possible profits are capped at a certain amount. Any remaining money is re-invested in the company. Yet the nonprofit's board and mission still governed the company, creating two competing tribes within OpenAI: adherents to the serve-humanity-and-not-shareholders credo and those who subscribed to the more traditional Silicon Valley modus operandi of using investor money to release consumer products into the world as rapidly as possible in hopes of cornering a market and becoming an industry pacesetter... The question was, did Altman abandon OpenAI's founding principles to try to scale up the company and sign up customers as fast as possible? And, if so, did that make him unsuited to helm a nonprofit created to develop AI products 'free from financial obligations'?

Microsoft's stock price hit an all-time high this week, reports the Wall Street Journal. (They also note that when OpenAI employees considered moving to Microsoft, CEO Satya Nadella 'assured their potential colleagues that they wouldn't even have to use Microsoft's workplace-communications app Teams.')

'But the ideal outcome for Microsoft was Altman going back to OpenAI as CEO, according to a person familiar with Nadella's thinking. By opening Microsoft's doors to the OpenAI team, Nadella increased Altman's leverage to get his position back...'

Even after investing $13 billion, Microsoft didn't have a board seat or visibility into OpenAI's governance, since it worried that having too much sway would alarm increasingly aggressive regulators. That left Microsoft exposed to the risks of OpenAI's curious structure... Microsoft has had to strike a tricky balance with OpenAI: safeguarding its investment while ensuring that its ownership stake remained below 50% to avoid regulatory pitfalls... AI is wildly expensive, and Microsoft's spending is expected to soar as the company builds out the necessary computing infrastructure. And it's unclear when or if it will be able to make back these upfront costs in added new revenue...
Nadella is banking on OpenAI's independence leading to innovations that benefit Microsoft as much as humanity. But the uncertainty of the past week has shown the risks in one of the world's most valuable companies outsourcing the future to a startup beyond its control.
When Chris Wallace asked Swisher if he should be more concerned about the dangers of AI now — and of its potential to take jobs — Swisher had a different answer. 'One of the concerns you should have is the consolidation of this into bigger companies. Microsoft really want to win here...'

But she didn't let the conversation end without wryly underscoring the potential for AI. 'I'd be concerned that there's not enough innovation... It could be a good thing, Chris. Trust me, it could be a good thing. But it could also, you know, kill you.'
Thanks to Slashdot reader Tony Isaac for sharing the article.

Read more of this story at Slashdot.