Sam Altman, Microsoft And The OpenAI Mayhem, Explained

It’s been a chaotic few days for Sam Altman, co-founder of OpenAI. On Friday, the board unexpectedly ousted him from the CEO seat, in a move that shocked insiders and the wider industry. And on Sunday evening, Microsoft – OpenAI’s massive, deep-pocketed backer – announced it had hired Altman to lead its in-house AI wing.

What just happened?

In a nutshell, quite a bit. OpenAI’s dramatic shake-up stunned insiders and the wider industry. The board put the blame on Altman, saying he hadn’t been "consistently candid in his communications". But there was plenty of opposition to go around. OpenAI’s president Greg Brockman resigned in a defiant stand against the move, signaling a potential wave of further departures up ahead.

Industry heavyweights also weighed in, with Microsoft CEO Satya Nadella spearheading efforts to reinstate Altman. The board’s response was a firm “No”: it announced instead that Twitch CEO Emmett Shear would be Altman’s successor. Shear is hardly an Altman clone: known for his cautious approach toward AI’s existential risks, he represents a striking shift in strategic direction for OpenAI.

As for Microsoft, well, the firm just announced that Altman and Brockman will lead the software giant’s new in-house team. Drama mode on.

What does all this mean?

Humanity’s relationship with AI might be at an early tipping point, and Altman’s sudden dismissal as CEO of OpenAI just might signal a shift in how the industry handles the technologies’ rapid evolution. Rumors have been swirling that the board’s decision was driven by safety concerns and a fear that Altman’s aggressive pace could bypass essential safety protocols. Elon Musk – another OpenAI founder – posted on X (formerly Twitter) that he was “very worried” and said he didn’t think the board would take such drastic action unless it felt it absolutely necessary. And that suggests that a catastrophic AI scenario could be more real than previously believed. That’s a chilling prospect.

As for OpenAI, it now faces its own existential risk and a critical challenge in maintaining its competitive edge. Retaining talent and continuing innovation at a breakneck speed is crucial, especially in a field that’s fast becoming crowded with contenders. While some might view Altman’s departure as just another executive shuffle, the reality seems far more complex. Altman’s role in OpenAI was not ordinary: his influence and fundraising prowess have been likened to that of Steve Jobs. His absence leaves big shoes to fill for a company that serves over 92% of Fortune 500 companies and boasts two million customers.

And Altman isn’t riding off into the sunset. In charge of Microsoft’s AI efforts, he can focus on growing the technology – and this time with almost unlimited funding, the best infrastructure, and for maximum profit. He might also devote more time to his high-profile side projects, like the Worldcoin crypto project, initiating an AI chipmaker, and a potential AI hardware venture with support from SoftBank and former Apple designer Jony Ive. He may have lost a battle, but you shouldn’t bet on him losing the war.

Why should you care?

Set aside the apocalyptical risks of AI-driven human extinction (if you can). And you’ll see that the repercussions of this shake-up also create some potential stock winners. Microsoft, which saw a short-lived stock dip after Altman’s ouster, is the most obvious one. The tech giant – which had invested over $10 billion in the startup – already had access to OpenAI’s IP through various contracts. But it now also has integrated top talent that knows how to leverage the technology into its fold – and free from OpenAI’s nonprofit restrictions. And if OpenAI’s other major investors agree, Microsoft could even position itself to acquire more of the smaller firm, and at a more favorable price. We might just have witnessed another genius 4D chess move by Microsoft’s Satya Nadella.