On November 20, Microsoft emerged as the primary beneficiary of the turmoil at OpenAI, strategically hiring ousted CEO Sam Altman and key personnel from the startup. This move aimed to prevent a potential exodus to competitors and reinforce Microsoft’s position in the competitive field of artificial intelligence.
The upheaval at OpenAI raised concerns about the impact on Microsoft, a major investor in the startup and a user of its technology in various AI offerings, including the Copilot AI assistant. Analysts dubbed this strategic move as crucial in ensuring that what is often referred to as “the golden child of AI” remains within Microsoft, particularly as the company contends with Google, owned by Alphabet, for dominance in the emerging AI industry.
Microsoft’s stock experienced a surge of up to 2%, reaching a record high and potentially adding nearly $30 billion to its market value. This value closely approached the valuation OpenAI achieved in its previous funding round.
Following Altman’s unexpected removal from OpenAI, he will lead a new research team at Microsoft, joined by Greg Brockman and other researchers, including Szymon Sidor. Analysts praised Microsoft’s ability to turn a crisis into an opportunity with these strategic hirings, suggesting that the company could now assume a key role in AI development.
Around 500 OpenAI employees had reportedly threatened to leave unless the board reinstated Altman and Brockman. The employees expressed dissatisfaction with the board’s actions and governance, emphasizing Microsoft’s assurance of positions for all OpenAI employees at its new subsidiary.
Analysts anticipated an employee exodus from OpenAI, citing concerns about governance and the potential impact on a planned share sale at an $86 billion valuation. This valuation could have affected staff payouts at OpenAI, particularly with the expected value of Profit Participation Units for key employees.
The Altman-led team at Microsoft is anticipated to benefit from increased access to the necessary computing power, given Microsoft’s status as the second-largest U.S. cloud player. The company has committed to significant investments in expanding its datacenter capacity, offering a strategic advantage for the AI research team.
While the exact implications of these developments are still unfolding, Microsoft’s strategic moves in the wake of OpenAI’s turmoil position the company favorably in the competitive landscape of artificial intelligence.
