Tech
As of November 20, 2023, the question of who controls OpenAI has become increasingly complex, especially with recent developments involving its leadership and corporate structure. OpenAI, the company behind the revolutionary AI model ChatGPT, has been navigating a significant transition from a nonprofit organization to a for-profit entity. This shift has raised questions about equity distribution and control, particularly given Microsoft's substantial investment in the company.
Corporate Structure and Governance
OpenAI's structure is unique, with a nonprofit entity, OpenAI Inc., controlling a capped-profit subsidiary, OpenAI Global. This setup allows the company to raise external investments while maintaining its nonprofit mission. The board of the nonprofit entity holds significant power, including the ability to hire and fire the CEO, as demonstrated by the recent firing of Sam Altman23.
Recent Leadership Changes
In mid-November 2023, the OpenAI board fired Sam Altman as CEO, citing concerns over his approach to safety and the company's mission. This move was met with resistance from employees and Microsoft, leading to negotiations for Altman's potential return. Eventually, the board agreed to reinstate Altman, and most of its members resigned, with new members appointed23.
Microsoft's Role
Microsoft is OpenAI's largest investor and has played a crucial role in supporting the company's operations. Microsoft's influence was evident in the negotiations following Altman's firing, as the company hired Altman and other departing OpenAI employees to lead a new AI research team. However, Microsoft's control over OpenAI is not absolute, as the nonprofit entity's board retains significant decision-making power23.
Future of OpenAI
As OpenAI transitions to a for-profit model, valued at $157 billion after a recent funding round, the distribution of equity and control will be critical. Microsoft's nearly $14 billion investment could translate into significant ownership, but the specifics of this arrangement are still being negotiated1. The company's mission to develop artificial general intelligence (AGI) while balancing commercial interests will continue to shape its governance and operations.
In summary, while Microsoft is a major investor and influencer, the control of OpenAI remains with its nonprofit board, which has the authority to make key decisions about the company's direction and leadership.
Sources:
Matt Levine, Bloomberg Law, Matt Levine's Money Stuff: Who Owns OpenAI?
https://news.bloomberglaw.com/artificial-intelligence/matt-levines-money-stuff-who-owns-openaiOpenAI: Facts from a Weekend, GreaterWrong.com
https://www.greaterwrong.com/posts/KXHMCH7wCxrvKsJyn/openai-facts-from-a-weekendMax Read, The interested normie's guide to OpenAI drama, Substack
https://maxread.substack.com/p/the-interested-normies-guide-to-openai