Microsoft Emerges as the Winner in OpenAI Chaos

Microsoft has hired OpenAI cofounders Sam Altman and Greg Brockman to head a new advanced AI team, acquiring one of the most successful management groups in the AI industry.

Just after 2 am Pacific time on Monday morning, several OpenAI staffers—including its chief technology officer, Mira Murati—posted in unison on X: “OpenAI is nothing without its people.” Sam Altman, who was dramatically removed as the company’s chief executive on Friday, reposted many of them. By then, Altman already had a new job. Satya Nadella—CEO of Microsoft, a major investor and partner of OpenAI—announced late on Sunday night that Altman and his cofounder Greg Brockman would be joining the tech giant to head a new “advanced AI research team.” Nadella’s statement seemed to suggest that others from the startup would be joining Microsoft.

By hiring Altman and Brockman amid the chaos at the top of OpenAI, Microsoft has managed to acquire one of the most successful management teams in artificial intelligence without having to buy the company—whose pre-chaos valuation was $86 billion.

“Satya now looks like one of the most epic kingmakers,” says Nathan Benaich, founder and general partner at Air Street Capital and author of the State of AI report.

At least three other senior researchers—Jakub Pachocki, Aleksander Mądry, and Szymon Sidor—have reportedly left OpenAI.

“The head and the arms and one of the legs [of OpenAI] have gone to Microsoft,” says tech analyst Azeem Azhar, author of the newsletter Exponential View. “This is an enormous opportunity for Microsoft because it gets to take Sam Altman and Greg Brockman and probably a large part of the leadership team, and many of the very best engineers and researchers.”

At Microsoft, Altman and Brockman will have access to huge amounts of capital and compute power, Azhar says, as well as the tech giant’s support to develop other parts of the AI tech stack, including chips and consumer electronics. Altman was reportedly trying to raise billions of dollars from investors for a new chip project in the weeks running up to his firing. Altman and OpenAI had also been linked to a hardware venture with former Apple head of design Jony Ive that was reportedly hoping to build the “iPhone of AI,” backed by Softbank’s Masayoshi Son.

“I’m sure [Microsoft] will give Sam the leeway to go up and down the stack,” Azhar says. “Microsoft itself is developing its own chips for AI. Well, Altman’s group can probably help with that now, and they will be developing consumer electronics like surface computers and so on. Sam can start to head into that direction now through this group.”

Microsoft shares slipped on Friday as news of the problems at OpenAI spread. OpenAI’s technology has been integrated into a number of Microsoft products, including its Bing search engine, and the two companies’ fortunes had been seen as deeply intertwined. The news that Altman will be moving to the company is likely to restore confidence, analysts say.

“[Microsoft] hired this key asset and now he will oversee OpenAI from Redmond along with Nadella which is music to the ears of investors,” Dan Ives, senior equity research analyst covering the technology sector at Wedbush Securities, said in an email. “If Microsoft lost Altman he could have gone to Amazon, Google, Apple, or a host of other tech companies craving to get the face of AI globally in their doors. Instead he is safely in Microsoft’s HQ now leading the company’s key AI efforts.”

In an increasingly competitive AI industry, this is more than just steading the ship after a chaotic few days for Microsoft. “Microsoft would never have thought they would get this level of talent, right? And especially at the senior level,” says Imran Ghory, general partner at VC Blossom Capital.

What it means for OpenAI isn’t clear, but the weekend’s events have also punctured a pervasive myth that the company’s lead in the industry is bulletproof. “The weekend’s chaos has shown us that no one is immune from the laws of corporate physics. Considering Sam’s centrality, it’s the most baffling decision from an AI lab I’ve witnessed,” he says. “People who are investing in OpenAI took the view that it was invincible. History teaches you that no one is invincible.

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