Microsoft already has a perpetual license to all of OpenAIs IP and could easily hire every single one of thier employees without blinking
https://www.wsj.com/articles/microsoft-and-openai-forge-awkw...
Think of what Apple can do with a license to ARM and now compare that to what MS could do with a license to GPT 3?
Do you really think any company would depend on another companies technology the way that MS is dependent on OpenAI without having a favorable license?
I’ve dealt with something similar on a very minute scale on both sides - being a dev lead at a startup where our largest customer accounted for 70% of our revenue and being the dev lead where the company I was working for accounted for 70% of a vendors revenue.
Each time, I saw how much power the customer yielded. It involves lawyers, licensing, contingencies, etc. and in both of the cases above - escrowing of code where the customer got the rights in certain conditions.
I’m 100% sure that MS has better lawyers than I encountered.
You can't compare a hostile OpenAI with a cooperative ARM. Even with a cooperative OpenAI, Microsoft restricts internal researcher access to the source code, so the license appears less favorable than you think.
Again I’m 100% sure that Microsoft wouldn’t base its entire technology line on another company’s IP without having very favorable licenses. That’s just not how these things work.
Licensing ChatGPT versions developed by OpenAI seems favorable enough to me. The question boils down to what happens if OpenAI stops development. I highly doubt the bright minds at OpenAI gave away their IP for widely available compute credits.
Unless they are a gang of thieves, they are all exchanging labor for money to support their addiction. Who do you really think has the negotiating power in this relationship?
The smaller OpenAI that signed the Microsoft agreement had plenty of sustenance. Compute remains fungible unlike LLMs.
And if you think a migration at that scale is “easy” you haven’t been involved with mass migrations. Besides, Microsoft’s enterprise customers aren’t going to jump ship to another cloud provider and follow OpenAI.
Before I was giving anecdotes from n-6 job working at a startup and my n-3 job when I was on the other side of the table as a vendor’s largest customer.
This part of knowing how the cloud industry and migrations work comes from my n-1 job working in the Professional Services Department at AWS when I was involved with large migrations and saw how sticky enterprises were when it came to dealing with Microsoft.
And what does OpenAI have to offer another company with Microsoft already having 49% equity?
Second, I meant the OpenAI that signed the initial agreement with Microsoft years ago already had ample resources and funding. In those negotiations, OpenAI would have had little incentive to hand over all their IP regardless of the offer on hand.
Also, it’s standard in many contracts that you can’t actively poach a partner’s employees. That doesn’t mean that if the employees actively reach out to you, you can’t hire them. I saw that at AWS.
If they had so much funding why were they willing to give up 49% of the company to Microsoft? Does that read like a company that could be picky?
OpenAI gave up 49% equity because they thought Microsoft gave a fair valuation and terms, among other possible reasons. OpenAI wanted to scale up their LLM research so they signed the agreement. I don't think OpenAI negotiated from a position of weakness.
The only strategic play left to OpenAI is spite. They can choose to burn down Chat GPT which will lead to a scattering of their talent across competitors (although Microsoft will likely just pick up most). This will slow down Microsoft by a couple of months but will be nothing more than a bump on their way to AI dominance.
The board should have led with this as an implied threat behind closed doors and given both Altman and Nadella a face-saving public retreat. Altman goes off to start GPTSoft with equity, a license to GPT4 and access to Microsoft's cloud compute. Everyone gets to call this a win. Public humiliation was a mistake.
That's not a problem for the non-profit board. If the mission is best served by the non-profit ceasing to exist, they should make it cease to exist.