Sam Altman’s ouster puts new twist into OpenAI’s relationship with Microsoft

The surprise removal of Sam Altman from OpenAI on Friday is the buzz of the tech industry — raising questions about the company’s role in the AI revolution, the ambitions of Altman and his team, the impact of his exit on the rest of the tech industry, OpenAI’s complex corporate structure, and its unusual partnership with Microsoft.

• Altman helped start OpenAI in 2015 as a non-profit organization. In 2019, the non-profit created an affiliated “capped-profit” entity, aimed at giving it the resources to pursue its vision without the profit incentives of a traditional company.
• Reports overnight indicate that a conflict between Altman’s ambitions for OpenAI and the mission of the nonprofit were at the core of the board’s decision to oust him as CEO and remove OpenAI co-founder and President Greg Brockman as chairman.

• Brockman was initially designated to report to Mira Murati, the OpenAI CTO who was named interim CEO by the board, but he then resigned from his executive role later Friday afternoon.

Microsoft shares fell more than 3% in after-hours trading Friday, underscoring the importance of the OpenAI partnership to the company, and the impact of the uncertainty created by Altman’s ouster.

• Microsoft has invested billions of dollars in OpenAI and has used its technology to put Microsoft’s own products at the forefront of the AI revolution.

• The Redmond company was blindsided Friday by the decision to remove Altman, learning about it shortly before the news was announced.

• Microsoft CEO Satya Nadella — who appeared on stage at OpenAI's developer event earlier this month (above, with Altman) — issued a statement Friday afternoon, offering reassurances to Wall Street and Silicon Valley about the company’s relationship with OpenAI and its ability to capitalize on the AI revolution with products of its own. 

On a new episode of the GeekWire Podcast, we hear from Matt McIlwain, managing director at Seattle venture capital firm Madrona Venture Group. 

• Microsoft was wise to speak out quickly, said McIlwain, who focuses on areas including applied artificial intelligence and intelligent applications.

• Ultimately, he said, the instability at OpenAI underscores the need for a diversity of AI foundation models in the industry, with cloud platforms such as Microsoft Azure, Amazon Web Services, and Google Cloud offering their customers a broad selection of AI technologies.

• Listen and read more here, or subscribe to GeekWire in Apple Podcasts, Google Podcasts, Spotify or wherever you listen.