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The key quote in the article is "The actual contract Microsoft has with OpenAI is not publicly available", so we have to go by these imprecise quotes uttered by the CEO during podcasts, such as "We have all the rights and all the capability. I mean, look, right, if tomorrow, if OpenAI disappeared, I don't want any customer of ours to be worried about it, quite honestly, because we have all of the rights to continue the innovation, not just to serve the products".

So, uh, does anyone have any ideas on what the situation actually is? If OpenAI ceased to exist, can Microsoft take the code, model weights, everything of ChatGPT 4, and just continue developing it and produce a new MS-ChatGPT based on it? That seems to be too good to be true. Why would OpenAI give away all of it's IP to Microsoft for that cheap, with the only limitation being MS can only make a 100X return + 20% a year, and MS does not own any IP which OpenAI deems to be at the level of AGI. A deal like that is surely worth more than 10B.

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> a deal like that is surely worth more than 10b

A deal like that - if true - would also imply that they should have abruptly fired Sam years ago, before it got signed off

(Of course Satya's comments can also be interpreted as rather more loosely implying they're perfectly capable of maintaining what they've licensed and hiring the expertise to build their own GPT5)

But then OpenAI wouldn't be where it is today. So was it good or was it bad?

Someone else would have probably signed a similar deal, without OpenAI giving Microsoft the incredible leverage of owning all the IP, and being able to offer your entire staff a 20% pay raise to jump ship.

If Sam was responsible for that, he smuggled one hell of a trojan horse into OpenAI, and should have been fired a long time ago.

Which company could that have been and how would that have turned out any differently?

It seems like OpenAI needed deep pockets and access to computing power to survive. That limits the potential companies they could have cut deals with.

Aye, wasn't MS's main offer Azure credits?

The compute resources that are required are massive, and if not MS then you're getting into bed with some other Big Corp, i.e. Amazon, Oracle, IBM, Google, etc.

You deal with the devil at your peril. But this is still an own goal by the OpenAI board, before last Friday there were no circumstances that would have pitted the board against Microsoft and now there potentially are. Bad move.

> If Sam was responsible for that, he smuggled one hell of a trojan horse into OpenAI, and should have been fired a long time ago.

What's the likelihood that he signed onto a $10 billion investment deal from Microsoft without approval from the board?

Zero. And if it was done without board approval then that would have been the moment to can him.

Sam might not have been candid with the board about the implications of the deal.

Then the board failed in their duty of oversight. Because they could have found this out regardless of Sam being candid or not, implications are the consequences of that which is written on the papers and those papers were presumably available for inspection by the board. Unless Altman changed the paperwork but that would be an entirely different level and based on the statements by the new CEO none of that was the case. It seemed to be mostly a reason made up by the board to make the firing look good.

Are you saying he asked them to approve a contract that the board never saw the terms of, and they agreed?

This is a lot of jumping up and down over nothing.

Think about it when the deal was on the table:

1) Take the money. If OpenAI fail, MS get the code. OK, who cares, OpenAI have gone bust.

2) Don't take the money, don't become successful unless they can find another partner with such a good fit (deep pockets and resources).

It made sense to allow MS to have the code if OpenAI failed since they'd have had nothing to lose apart from whatever residual value they could sell their IP for (which they already were effectively doing for $10B, so fair enough). If this was a sticking point to secure a $10B investment, it made sense. OTOH if they granted the IP to MS not contingent on OpenAI failing, then that would have been sheer incompetence.

Option 3: negotiate a deal with a corporate partner with terms that mean it's more lucrative for them to help you succeed rather than take steps to ensure you fail at the first sign of trouble seems like a better choice.

Clearly the possibility of OpenAI failing is not independent from the behaviour of its corporate partner. And I'm not sure Microsoft's negotiation is quite bad faith enough or their interest in OpenAI low enough to have made the entire deal contingent on the "if/when we decide to move aggressively against your company so it collapses we get exclusive free in perpetuity access to everything you ever did and no more caps to the profits from them" clause. If it's in there, it's in there because they signed a bad deal rather than because it was the only possibility.

Who will do that after MS already has been given all but the keys to the kingdom, and with all of the results of your efforts almost automatically flowing to your competitor by way of the deal that precedes yours?

Its the original deal I'm saying shouldnt have been considered on "keys to the kingdom... if we should happen to unfortunately die" terms (I think my edit to make that clearer came after your post)

Ah ok, that makes more sense.

I think Microsoft could easily spin this as just protecting their interests.

Well hindsight is 50/50. The company probably never thought they'd almost commit suicide.

Investment would have been possible on terms which didn't mean that OpenAI failing was all upside for Microsoft. (I suspect the actual terms aren't quite that generous and MS would actually have to rebuild some stuff from scratch if OpenAI implodes, but Satya isn't bluffing about being confident they could and unconcerned if his hiring stunt causes the collapse)

I guess if you believe OpenAI's original stated mission was ever more than a marketing pitch, there's a good argument that it's all been bad anyway (building and licensing extremely impressive tech for their corporate partners and a growing consumer base isn't obviously contributing to making the world a "safer from unfriendly AI" place)

I believe it was a fig leaf all along and I believe that that fig leaf was abused for personal gain or to settle a score with disregards to the consequences.

That's based on a long time in business, I can't recall the last time I saw someone blow up an 80 billion dollar company based on ethics alone.

It seems like they had a lot of smart people doing smart things. I would hope it wanted to be open and non-profit so it didn't have to live by the "move fast and break things" mentality of all start ups.

That went out the window the day they made the deal with MS and that's precisely when they took off. With a few billion in your pocket you are able to execute faster and better on your vision than when you are doing it for glory and fame.

It wouldn’t be the first time Altman orchestrated something sketchy like that: https://old.reddit.com/r/AskReddit/comments/3cs78i/whats_the...

That, plus accounts of him being deceptive/manipulative like this (e.g. https://twitter.com/geoffreyirving/status/172675427761849141...), plus being fired precisely for deception makes it pretty consistent.

> If OpenAI ceased to exist, can Microsoft take the code, model weights, everything of ChatGPT 4, and just continue developing it and produce a new MS-ChatGPT based on it?

Well, if OpenAI magically got erased from existence, probably.

More realistic scenarios, like if they continued to exist, but there was a legal dispute about breach by Microsoft of the agreements by which Microsoft got access to the IP, may be more complicated.

How much money and power would a gutted OpenAI have to devote to a protracted legal battle against Microsoft’s army of lawyers? It feels like robbing a man with cancer and hoping that they die before the case gets to the court, which feels very on brand with how Microsoft used to play things in early windows days.

> How much money and power would a gutted OpenAI have to devote to a protracted legal battle against Microsoft’s army of lawyers?

What happens when a “gutted" firm has assets whose value cannot be realized except by an actor with greater resources and time window, but those actors do, in fact, exist?

> assets whose value cannot be realized except by an actor with greater resources and time window

Somewhat disagree on this, since open sourcing their model and code would help a lot of people in a lot of different ways.

> Well, if OpenAI magically got erased from existence, probably.

I would not rule that out.

I believe Satya because if he's lying, this is securities fraud.

Securities fraud hasn’t stopped countless CEOs and people in high power positions from embellishing, lying, thieving their way to riches.

Musk in particular hasn't stopped.

If you already have riches, it’s a good way to lose them unless you’re really careful.

Musk is a poster child on this front.

Lying about a material fact in a way that would be trivial to prosecute you on, especially when you have a well funded adversary it impacts, and that would be more than happy to destroy you with such a lie, is a good way to lose riches.

This is more like Ukraine announcing Putin’s pending invasion in advance.

You would be surprised how having riches does not stop people from continuing to be greedy.

Weird to bring Ukraine and Russia into this...

Where did I say it didn’t? That’s actually a rather bizarre tangent.

Ukraine and Russia seem quite applicable, since Mr. Nadella was basically making it clear that:

1) he knew the potential direction someone might take to harm the company he is in charge of, and

2) there were already plans/things in place to make their chances of success zero. Plans that the opponent knows about and can verify, and in Microsoft’s case they were a party to making.

It’s the ‘I see what you’re doing there’ notice.

You’d have to be pretty desperate to keep going after that kind of notice. Russia was, and it has cost them immensely. We’ll see how it plays out OpenAI wise.

If those things weren’t all provably true, then it would be a really dumb move to do as it just exposes him to tons of direct risk with no plausible gain, as the opponent would have zero compunction in hurting him with it - and tons of ability to do so.

My prior that “CEOs will not commit securities fraud if they think they will get away with it and benefit from it” is clearly much weaker than yours.

The data does not show Microsoft needs to commit fraud to benefit in this scenario. The OpenAI board is doing it to themselves, with someone lucky and savvy putting a sheet out to catch the windfall.

If you don't want Microsoft to take everything, "stop hitting yourself."

> The data does not show Microsoft needs to commit fraud to benefit here.

So you are saying that, on “the data”, Microsoft would not be in a materially worse business position given the OpenAI chaos if the security of their rights to OpenAI models in the event of a breakdown in their existing relationship was perceived as insecure?

Because otherwise the chain of reasoning is:

The licensing is secure, because Nadella says so, and Nadella can be trusted because if he was lying it would be securities fraud, and Nadella wouldn't commit securities fraud even if it would benefit Microsoft’s and, therefore, his interests.

Microsoft is not in a fight for its life, OpenAI definitely is at this point.

That alone translates into Microsoft doesn't need to commit fraud, all they need to do is sit back and watch the rest implode and come out winners. They don't even have to sue, all they need to do is do nothing and OpenAI is toast.

That press release from MS the other day is a bowshot, not a promise. 'Play ball or else' with the 'or else' bit conveniently left to the imagination of the recipient.

> Microsoft is not in a fight for its life, OpenAI definitely is at this point.

> That alone translates into Microsoft doesn't need to commit fraud

My prior that “the only possible benefit to securities fraud is in circumstances of imminent existential risk” is clearly weaker than yours. Also, if Microsoft's description of the licensing situation is misleading, the existential risk to OpenAI—which makes it more likely that someone else ends up with control of its assets—makes the risk to Microsoft greater, not less.

Based on Microsoft's presentations so far and the fact that OpenAI has protested none of them it appears to me that MS indeed has those rights and they undoubtedly have the capability.

Change of control is a very standard clause in Escrow arrangements and it may have been subtly worded specifically to ensure that control of the company remained friendly to Microsoft interests given that they did not have a board seat. That's pretty much the only way they should have accepted that construct. If they didn't they were dumb and you can say a lot about Microsoft (I know I have and they're a shit company in my opinion) but they know the legal world like few other tech companies.

MSFT is up over 50% since investing $10B in OpenAI. That's a couple orders magnitude difference in market cap over the investment alone.

Satya does not sound like someone communicating from a position of strength - he's been repeatedly assuring his shareholders that no matter what happens, their AI plans moving forward are secure. They need stability, not chaos, because whatever clear lead it seems they have right now could be quickly be eclipsed in the coming months.

Committing securities fraud and accepting a fine would pale in comparison to the potential value erosion.

Securities fraud == jail time. You really don't want to go there as the public face of a listed company.

Sure it can, but this is an extremely unlikely case for jail time.

Ask Martha Stewart if she agrees with that statement.

Unlikely doesn't mean it doesn't happen and the more high profile a case the more likely the SEC will do something about it.

https://www.nbcnews.com/business/markets/10-ceos-who-went-bo...

Martha Stewart was clearly an unusual situation where they were trying to make an example to hit hard in the public discourse.

I don't think the average citizen will care so much. When it comes to white collar crime making some white lies to bolster shareholder confidence is not in the same orbit as the type of massive fraud for notable jail time cases over the last couple decades.

At worst it should be a moderate SEC fine, perhaps a shareholder lawsuit if things don't turn out favorable. And this is assuming a lot that has to go wrong.

I don't presume to know what is the appropriate punishment for something like this. I do know that this is a high profile case and those attract attention of regulators because there is the opportunity to make an example. And I also know that people in fact did go to jail for what in monetary terms were far smaller offenses. Nadella isn't that stupid. I don't like him because he's just like Gates but with a lot more polish but I would not bet against him in anything concerning legal affairs. MS has some of the best legal minds in the industry, in fact I'd rate them higher on legal than I do on technical acumen.

Again, they make an example because people are pissed off. Despite this saga making front page news, no one is going to care much about Satya making misleading claims about OpenAI IP ownership. The average person on the street will not lose their retirement fund from that revelation.

The links to politicians, lobby efforts, the US economy, etc, etc... means something really egregious has to happen for jail time to be an issue w/ high level white collar crime.

EDIT: Since I can't respond further to the chain - tons of people cared about Martha Stewart. They were sick of people in high society getting a slap on the wrist for things like this. It definitely was a cathartis... esp. from someone so unlikely.

Absolutely nobody was pissed off about Martha Stewart. And at least 700 people + a whole raft of well known investors are pissed off about the OpenAI situation, so if MS Execs commit securities fraud - a stretch to begin with - there will be a lot of support for such action.

I'm trying very hard not to let my personal feelings about Microsoft cloud my judgment and if anything happened to Microsoft I wouldn't shed a tear (and might even open a bottle of bitter lemon). I don't see them committing an own goal like that.

But, I don't think we're going to agree on this.

"Funding secured!"

https://www.theverge.com/2022/5/6/23059930/nvidia-sec-charge...

MSFT doesn't have the culture to continue development at the same rate. So even if it had everything - people, code, weights, office plants, all of it - it's still not going to be able to do much it in the future. GPT5 might keep the momentum going for a while, but that's going to be it.

MSFT actually is fighting for its life. GPT4 is an intriguingly useful curiosity, Later GPTs had the potential to be culturally, politically, financially and technically revolutionary.

That likely won't happen now. We'll get some kind of enshittified prohibitively expensive mediocrity instead.

> MSFT actually is fighting for its life.

Ok. That's funny. But if this turns out to be the piece of the apple that MS ends up choking on then maybe it was all worth it?

Could someone suggest Adam D'Angelo for the boards of Facebook, Google and Twitter please. Oh, wait...

https://en.wikipedia.org/wiki/Adam_D%27Angelo

And I repeat - MSFT is up over 50% since investing $10B in OpenAI. That happened this year. This is the most important thing on their plate.

Of the slate of $1-3T tech companies the question of "where can we go from here?"... this is where, and the winners will be the first $10T enterprises.

Yes, and they just got for the bargain basement price of 13 billion a 90 billion bonus.

They come out smelling like roses already and it can only get better, not worse for them going forward.

Not necessarily. There will be a period of uncertainty/instability that competitors can emerge and capitalize on. Say the whole crew comes along, it could still be several months and maybe all sorts of legal wrangling making things difficult. But more likely there will be splintering that will benefit Google, Anthropic, Meta, Apple, esp. if comp is there, and that could be catastrophic.

I read this whole situation as putting pressure on OpenAI to come to their senses and quick.

> I read this whole situation as putting pressure on OpenAI to come to their senses and quick.

That we are in violent agreement on, the board should negotiate to be allowed to flee indemnified for the fall-out of their action. But if they do not OpenAI is done for, Anthropic has already indicated they are not going to be there to pick up the pieces, and Google and Meta will try to poach as many employees as they can by being 'not Microsoft' (which has a fair chance of working).

So there is damage, but it isn't over yet and for the moment Microsoft looks as though they hold the most and the most valuable cards already. After all they already have 49%. Another 2% as a suing-for-peace pacifier and they're as good as kings.

I agree. But the message is to appeal to shareholders that they have the situation under control.

Nadella has a lot to lose, and is in a very high risk situation of doing so, by lying about this.

He could have worded it in a far safer way and had the same benefit if he wanted to as well.

IMO, odds are low he’s lying about this. It would likely look much different if he was trying to.

Yes, and this is a logical jump. Almost certainly -- I would be my own money on it -- any contract Microsoft would have signed would have contingencies around breach and force majeure that would either 1) directly license or assign OpenAI IP to them, or 2) put OpenAI IP in escrow as as a risk hedge against their partner's potential liquidation. In either case, Microsoft covers their investment risk and very likely gets access to OpenAI code (and, of course, as we've seen, the ability to freely offer to hire their talent).

To be frank, it's entirely possible that Sam could have been fired for agreeing to a contract like this without board approval because the existential risk OpenAI constantly faces dramatically increases the likelihood that OpenAI investors -- besides Microsoft -- would never be made whole in the case of an implosion. The "Adam D'Angelo spite" hypothesis is possible, too, but it seems far less likely that the board of such a valuable company -- no matter how inexperienced and feckless they might be -- would risk tanking the company on the personal vendetta of a single director.

There's always the classic "I misspoke" backpedal available

I don’t think he said anything too specific about which rights. I mean, I too have the right and ability to continue the innovation.

OpenAI won the current state of the adoption war because they focused on commercial availability and being willing to lose money on every API call more than others. There is no groundbreaking tech behind it.

>Microsoft take the code, model weights, everything of ChatGPT 4, and just continue developing it and produce a new MS-ChatGPT based on it?

They don't need Sam to do that, or his employees. With the current state of LLMs they can hire a few dozen people with some experience and that wouldn't be the hard part.

In my mind the aggressive poaching OpenAI has been doing with Meta and Google is because they have nothing special. If they did they wouldn't need to grow to 800 headcount and still hiring. They're anticipating some company will have the next breakthrough, and they wanted every important brain on their side

Having the weights to another transformer based LLM is great, but its not going to change humanity. The only thing I saw this weekend was a bunch of entrepreneurs who's new startup is 100% dependent on the GPT-4 API freaking out. Thats not ground breaking

OpenAI, w.r.t. the capabilities of their SOTA models are still better. Even without a loss they'd still be the leader.

> They don't need Sam to do that, or his employees. With the current state of LLMs they can hire a few dozen people with some experience and that wouldn't be the hard part.

If OpenAI leadership views it as a part of their charter to release their weights, research, etc. as open source, ten other companies would immediately catch up to Microsoft.

> If OpenAI leadership views it as a part of their charter to release their weights, research, etc. as open source,

Isn't it the completely the opposite of that, though?

> Isn't it the completely the opposite of that, though?

No, its more complicated, which is why they were initially actually open, then became closed as their assessment of the circumstances changed; their own inability to act as gatekeeper, which would go away with a split with Microsoft where Microsoft had unrestricted rights and was not in practice coordinating with them, could well sufficiently change the circumstances to change their stance, without any inconsistency in reasoning (not that reasoning itself can legitimately evolve, too.)

In simple terms, it plausible that they might see the broad preference as:

good gatekeeper of top of the line AI > open models > bad gatekeeper of top of the line AI

and also see Microsoft, after the current kerfuffle, as a bad gatekeeper.

If OpenAI sucks so much, then what should i use instead?

Well, I did say they are willing to burn money more than others - making their commercial availability better. Better yet ask yourself - will hollowed out Open AI and/or Satya be willing to lose money on every API call? Are you willing to pay the full cost of running GPT-4?

Google et al have gambled the answer for most API consumers is no

> There is no groundbreaking tech behind it.

This is false. Look at the chatbot arena leaderboard to see how GPT4-Turbo crushes the competition[1].

[1]: https://huggingface.co/spaces/lmsys/chatbot-arena-leaderboar...

crushes? sarcasm? Free Vicuna is 90% as good as the 100 Billion Dollar company made one. This makes my point.

And between Vicuna and GPT4-Turbo There are the Claude Models and WizardML. This is as even playing field as i've ever seen for the tech world.

When a $100B company gets to 2000, and the rest stay behind, thats when we know the tech has changed. Thats what OpenAI was hiring for. Not for anything they already gave Microsoft access to

If Microsoft wanted to get to 1100, they could do that with 50 smart hires from across the industry and universities. They don't need Sams teams $1M salaries for that

That's not how Elo scores work. A 120 point elo difference is a 66% win rate, which means you win 2:1. That means GPT4-Turbo wins twice as much as Vicuna. And even that isn't a fair comparison, since Elo isn't linear: it gets more and more challenging to go up in Elo as you go further and further.

Which one is better, ignoring adoption? If you're going to say Bard, no it's not.

We know you have heavy biases but its impossible to deny that OpenAI is leading both the commercial and open source space. I don't think that will always be true but it is true now.

On top of that, they have done an amazing job executing on getting product out to users. No other company in this space is even remotely close to this.

You make that deal when your CEO Sam Altman wants to take the company private instead of being open as originally planned and sell to Microsoft eventually. I don’t know where people got the idea that Microsoft wouldn’t own OpenAI one day. It’s always been in the cards and these events just accelerated that potential outcome. If OpenAI didn’t want to sell to Microsoft why didn’t they court any other cloud platforms? Why hasn’t another cloud platform stepped up for similar deals for GPT v5? It’s all been fairly obvious IMO.

The bigger question to me is if what Satya is saying is true, why even continue the charade with OpenAI’s board? Then what Satya is saying is probably just to protect the stock price.

> Why hasn’t another cloud platform stepped up for similar deals for GPT v5? It’s all been fairly obvious IMO

Well Microsoft could have contracted in some sort of exclusivity. Barring that, I think the obvious answer is because the leftovers aren’t that valuable.

Microsoft got 49%, and full access to all models, and most profits. The remaining profits and access to the same models as your competitors isn’t worth it.

Most big companies are making their LLMs, and I’ll postulate that while the tech is amazing, it’s not going to be the future where you need the One True Model. Google seems to be doing well enough with their models, Meta released pretty good models for free, Salesforce and Amazon are building out models, even smaller companies like Databricks got into the hype. Then with slowly opening access to models from Anthropic and other startups, GPT5+ alone isn’t worth it. Oracle maybe could buy access, but are they willing to outbid Microsoft?

The only thing that could be worth it is the ability to run/own ChatGPT the consumer product and brand. And who would own that? Google has their own, Apple wouldn’t want it, Meta probably can’t buy it without government intervention, Salesforce maybe, but they’re not consumer focused. Amazon maybe? Oracle maybe, but same problem as Salesforce?

Exactly it’s always been a play to sell to Microsoft and incentivized toward it. And as you state the longer this goes on the less valuable GPT v5 becomes and the faster OpenAI’s darling status burns up. It’s probably already too late.

> Why would OpenAI give away all of it's IP to Microsoft for that cheap

Building an LLM is one thing, operating one is another. Without a massive discount on actual operations OpenAI didn't have much of a business. They were likely getting their Azure stuff at cost, the same as an internal Microsoft org would be charged for Azure, which is cheaper than building their own infrastructure or paying retail cloud rates.

Microsoft wouldn't give them such a sweet deal without guarantees on their part. They're not going to put up billions and base products on a company that could cease to exist at any minute for a bunch of reasons.

The fact that MS actually physically owns the GPUs needed for a product of this scale is very interesting.

Side rant: just when the crypto madness settled down and I hoped to score a cheap graphics card, the AI craze starts up. Oh well.

They might have code escrow and IP transfer clause that are activated on some condition, like actual OpenAI defunction.

https://stratechery.com/2023/openais-misalignment-and-micros...

> This is, quite obviously, a phenomenal outcome for Microsoft. The company already has a perpetual license to all OpenAI IP (short of artificial general intelligence), including source code and model weights; the question was whether it would have the talent to exploit that IP if OpenAI suffered the sort of talent drain that was threatened upon Altman and Brockman’s removal. Indeed they will, as a good portion of that talent seems likely to flow to Microsoft; you can make the case that Microsoft just acquired OpenAI for $0 and zero risk of an antitrust lawsuit.

> (Microsoft’s original agreement with OpenAI also barred Microsoft from pursuing AGI based on OpenAI tech on its own; my understanding is that this clause was removed in the most recent agreement)

> Microsoft’s gain, meanwhile, is OpenAI’s loss, which is dependent on the Redmond-based company for both money and compute: the work its employees will do on AI will either be Microsoft’s by virtue of that perpetual license, or Microsoft’s directly because said employees joined Altman’s team. OpenAI’s trump card is ChatGPT, which is well on its way to achieving the holy grail of tech — an at-scale consumer platform — but if the reporting this weekend is to be believed, OpenAI’s board may have already had second thoughts about the incentives ChapGPT placed on the company (more on this below).

Discussed at https://news.ycombinator.com/item?id=38346869

The cited source indicates otherwise, that the license comes with restrictions. Ben didn't read the article.

https://www.wsj.com/articles/microsoft-and-openai-forge-awkw...

Who will fight them?

OpenAI's lawyers? Big tech passes everything through legal anyways.

Except for firing execs it seems. Everybody who remains in charge at OpenAI has so many conflicts of interest now that their best bet is to lay very low. Unless they want to be in lawsuits for the next couple of generations. And so far laying low is exactly what they are doing. Has there been any substantial statement from the new CEO yet?

OpenAI isn't Big Tech? Adam could reasonably argue his interest in Poe doesn't conflict with the nonprofit charter. Sam & Greg saw fit to leave him in place. Uncommunicative boards remain less unusual than you think, unfortunately.

> Adam could reasonably argue his interest in Poe doesn't conflict with the nonprofit charter.

Good luck with that line of argument, I wouldn't want my reputation and my fortune to hinge on that.

> Sam & Greg saw fit to leave him in place.

Bad mistake on their part given the guy's history.

> Nothing from Emmett yet.

I wonder if he'll resign...

I really don't think investors have the case you think they do. They may ultimately pin the board on some technicality but the case looks far from straightforward. Anyways, it looks like Sam has finally started talking with the board again.

https://www.bloomberg.com/news/articles/2023-11-21/altman-op...

Everybody involved has more to gain by patching things up and the 'rogue' board members vacating their seats, the sooner they realize that the better.

As for whether or not investors have a case: Microsoft may not, but the smaller investors probably do because they can fairly easily prove that their interests were harmed by the ill advised actions of the board.

The nonprofit board holds no fiduciary duty to for-profit investors, big or small. In theory, I suppose you could sue the board over undermining the charter but that seems tricky itself, this case aside.

You keep saying that. But only a judge can confirm that that means that they are able to cause harm without consequences. I don't buy that. The charter is not the only thing that governs what a board can and can not do, just like you can't contract out of the law in any other way a non-profit board members does not have automatic and complete immunity from the fall-out of their actions. That would be an interesting device: a full blown corporate armor that exceeds even the degree of insulation an indemnification would offer. It would be the boardroom equivalent of a magic cloak.

Harming investors in order to uphold the nonprofit charter sounds more reasonable than you suggest. Take it from Matt Levine. I don't think investors would win this line of argument.

https://www.bloomberg.com/opinion/articles/2023-11-21/openai...

But there is no proof whatsoever that they did this to uphold the nonprofit charter.

And until that proof surfaces I'm going on the assumption that it doesn't exist because if it does exist they would have certainly used it to bolster their case.

Note Ilya's statement of regret and that none of the board members have said a word and that the current CEO is nowhere to be seen. That does not look like a group of people that are acting boldly in the defense of their corporate charter to me.

It looks like a bunch of weasels that thought they could get away with murdering the chicken while they were unattended for five minutes and they're now all covered with blood and pretending to be innocent.

I think that argument fares even worse. The board only needs to prove to a judge they believed firing Sam would benefit the charter, and the leaks from their camp have stated as much. The board has deliberately stayed silent to avoid legal exposure, not a surprise.

> The board only needs to prove to a judge they believed firing Sam would benefit the charter, and the leaks from their camp have stated as much.

Leaks say whatever they want to say and if I found myself in this position - highly unlikely - and I would have leaked something it would have definitely been something to make me look good. Or did you think that if it made them look bad that it would have been leaked as well? In that case I can see your point.

Regardless, unless discovery finds a smoking gun that the board acted in bad faith vis a vis the charter, which nothing public indicates, a judge would likely tell investors to pound sand.

After many lawsuits I've learned to not pre-empt what I think a judge will think of anything. It's actionable. Whether they will prevail (or whether the counterparty will fold) is up for grabs.

Note this key quote by Nadella:

"“As a partner, I think it does deserve you to be consulted on the big decisions.”"

That's one way to look at what might be grounds for a suit. He could be wrong, but that won't stop them from suing to establish that fact and they have very little to lose.

the people owning the remaining 51% of OpenAI?

You should probably check out who those people are. Hint: they're not the board members that decided to yank the rug out from under the company.

They don't have to be board members to fight. The 51% shareholders are clearly wronged here in my view if MSFT just hires all of OpenAI staff AND takes the existing models and trade secrets.

Again, you should check who those 51% are. If you don't know who they are and what their relationship with Microsoft and the various board members is then you probably won't understand why your comments on this subject don't track.

Hint: the 51% are more likely to go after the board than that they are going to go after Microsoft because the board action is what precipitated this whole mess.

Microsoft is just - conveniently - picking up the pieces and periodically drops hints about what they'll do if anybody gets in their way of doing that.

Or maybe just their favorite CEO leaving the company or being forced out (or two out of three of the original founders leaving). Escrow triggers can be whatever you want them to be, but they do need to be spelled out up front and MS hopefully would never invest that kind of money without a legal review and a risk assessment.

> and just continue developing it and produce a new MS-ChatGPT based on it

"just" push the state of the art. unlikely, even if they have access to everything. they need the people and even then it's unlikely.

Honestly this sounds like CEO-ish for, "Yes, we can build a similar product but don't necessarily have all the IP." If there was a simple answer to the interviewer's question, he would have given it. I feel like there's a word count threshold for CEO utterances that is a pretty reliable test for bullshit.

Nadella certainly knows how to be evasive like that, but "all of the rights to continue the innovation" seems like a pretty direct claim that they can just pick up where OpenAI left off without any significant setbacks.

It's business-speak rather than technical/legal, but I don't know how else someone could reasonably interpret that.

They can iterate off ChatGPT but don't own the underlying IP?

Perhaps you can interpret it as saying, "Yes, we're a separate business, we have a right to innovate." These are the ways that people justify lying to themselves. And it's practically a CEO's job to lie to investors.

"continue the innovation" doesn't really mean anything concrete.

The underlying basis for his statement could be, not that MS has the necessary rights to all this wonderful OpenAI secret sauce, but that MS knows enough to know that there isn't any secret sauce--whatever they don't have rights to is not worth it anyway.

I'm not familiar with contracts of this nature, but it doesn't feel far fetched that a contract involving billions of dollars might include a clause where IP can be "inherited" for continuity purposes in the case of catastrophic failure of the providing party(?)

Microsoft probably has an escrow type deal on the code and weights: if anything goes sideways with OpenAI, Microsoft gets everything they need to take over.

Also someone previously mentioned that large chunck of Microsoft investment is in their compute credits. If so Microsoft effectivelly have acquired OpenAI.

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