OpenAI Controversy Benefits Microsoft as Altman Joins New AI Division

Crucial AI talent, including Altman, moves to Microsoft
Microsoft’s stock hits record high due to OpenAI acquisition
Investors consider lawsuits against the board
The board pursued a merger, but it faced rejection

After the board dismissed former OpenAI CEO Sam Altman, he joined the Microsoft (MS) “new advanced AI research team,” securing a unique position for Microsoft in the artificial intelligence (AI) field among global corporations. Amid the controversy over Altman’s dismissal by the OpenAI board, many consider Microsoft, which has secured OpenAI’s intellectual property and technical talent, the real winner. This has led to a record high in Microsoft’s stock price.

Microsoft’s Investment in OpenAI

Microsoft has been the largest investor in OpenAI since 2019, with a total investment of $13 billion and a 49% stake. Despite being the largest shareholder, it could not fully own or control OpenAI due to the need to consider other investors. Furthermore, a non-profit board controlled OpenAI, making it difficult for Microsoft to express different opinions. However, the recent situation, which led to crucial OpenAI personnel, including Altman, moving to Microsoft, is considered to have effectively given Microsoft ownership of OpenAI.

Employee Demand for Board Resignation

Foreign media reported that on the 20th (local time), as many as 700 of the 770 OpenAI employees circulated a letter demanding the board’s resignation. They have taken a strong stance that if the board does not resign, they will follow former CEO Altman and leave to move to Microsoft. In the statement, they emphasized that “Microsoft has promised to guarantee the employment of all OpenAI employees if we express our intention to join.” After the OpenAI board dismissed Altman on the 17th and controversy arose, both parties discussed a return the previous day. Still, it fell through, and Altman decided to join Microsoft on this day. It is known that the board did not accept Altman’s request to resign all directors and to form a new board.

The list of those demanding the resignation of the board includes board member and Senior Scientist Ilya Sutskever and CTO Mira Murati. Sutskever wrote on his X account that day, “I deeply regret participating in the board decision” and “I will do my best to reunite the company.” Other employees also posted messages on their accounts saying, “OpenAI is nothing without its employees,” one after another. Altman sent his support by adding heart emoticons to each employee’s posts. The number of employees who have already resigned exceeds dozens. Employees are also angry that the ongoing plan to sell their shares has been scrapped. With Altman leaving and the company’s value plummeting, it has become difficult for employees to sell their shares. Bloomberg reported, “95% of the employees want to follow Altman and join Microsoft,” and “Competitors like Salesforce and Google are also trying to recruit OpenAI employees.”

Altman’s Departure and Impact on Shareholders

Microsoft’s stock price fluctuated immediately after the announcement of Altman’s dismissal. Still, CEO Nadella turned this crisis into an opportunity with the “Altman’s joining Microsoft” card, and Microsoft’s stock price rose by 2.05% compared to the previous day, hitting a record high. The Wall Street Journal analyzed, “Microsoft will have direct control in the field of AI by recruiting key talents from OpenAI such as Altman.” TechCrunch, an IT specialist media, reported, “By directly employing key talents from OpenAI, Microsoft has paid less for the regulations and obstacles it would have to face during future mergers and acquisitions.”

In a hurry, the board explored a merger with Anthropic’s CEO, Dario Amodei, but he rejected it. Amodei had worked at OpenAI until 2020 and left with other employees to start Anthropic. In addition, the board is considering bringing in additional investors to reduce existing shareholders’ stake. Still, as the current board has emphasized “non-profit” and public opinion has worsened, securing new investors is expected to be challenging.

Some predict that the OpenAI board will step down and Altman will return. According to Bloomberg, OpenAI investors are still pushing for Altman’s return, and Microsoft has indicated that it would not oppose this. The late founder of Apple, Steve Jobs, also faced dismissal from the board and returned to Apple after it experienced management difficulties.

By. Baek Joo Yeon