Finimize - 👋 Bye OpenAI, hello Microsoft

What’s going on here?

OpenAI’s founder was forced to step down over the weekend, after it seemed he wasn’t entirely, uh, open with internal communications.

What does this mean?

Artificial intelligence could be the biggest threat humankind has ever faced, so it’s essential that the forces harnessing the super-sensitive tech are trustworthy and stable. Well, no such luck: the cofounder of ChatGPT-owner OpenAI was recently cast out of the company for “not being consistently candid in his communications” – a reason vague enough to get social media speculating. And despite pressure from the firm’s investors and employees to reinstate the ousted leader, OpenAI is standing firm so far. Microsoft, however, nabbed the chance to get the former cofounder a staff badge.

Why should I care?

For markets: Altruism meets capitalism.

OpenAI is primarily a not-for-profit organization on a mission to ensure that the tech is developed responsibly, with money-making designs apparently playing second fiddle. Now in time, the world – or more specifically, the world’s media – could catch wind of the alleged secrets within the firm. And if the bust-up was over a case of putting profit before people, this debacle could raise bigger questions about whether responsible AI and profit-making initiatives can ever truly co-exist.

The bigger picture: Same leaders, different company.

All eyes are on Microsoft now. The tech giant not only snapped up two ex-OpenAI entrepreneurs, but also owns 49% of OpenAI. The private company is rumored to be worth around $90 billion, or at least it was before most of the company’s staff threatened to walk out over the reshuffle. Microsoft has cash to burn, though, so it might be able to pick up the rest of OpenAI on the cheap.

What’s going on here?

Luckin became the biggest coffee chain in China, as Starbucks’ signature green siren call fell on deaf ears.

What does this mean?

Starbucks has cemented itself as the head honcho of the frappuccino industry, planting a bright green mermaid on every block in any major city. But in China, coffee addicts are getting their caramel macchiato fix from Luckin instead. The Chinese-backed company used a slick app and home delivery service to start competing against the world’s biggest coffee chain in 2017. Now, Luckin owns a roster of 13,300 frill-free stores mainly located in China, making Starbucks’ 6,800 look like a struggling independent artisan roaster. That, despite Luckin being booted from the Nasdaq in 2020 after fiddling with its books. Clearly, decent coffee forgives a multitude of sins.

Why should I care?

The bigger picture: Homemade is best.

China’s retail market is one of the world’s biggest, so it’s no wonder global chains like Starbucks are clawing to make a name for themselves in the country. Problem is, the US dollar is expected to stay strong for a while, which means any international sales will probably be diluted when converted between currencies. Starbucks seems to think the hit is worth taking, increasing its three-year cost-saving plans by $3 billion to make room for international ambitions.

For markets: The US has no excuse.

Foreign companies can blame China’s lagging economy for shortcomings in the country – for now. But when the country’s eventual recovery pads shoppers with cash, they’ll likely use it to back companies founded on home turf. Alibaba and Tencent are already dominating the tech scene in China, while Anta has the run of the sportswear scene and Xiaomi is outselling Apple in the smartphone market. What’s more, with high interest rates forcing US companies to streamline their operations and future budgets, outsiders may struggle to fund the kind of inventions that could help them keep pace.