On November 17, 2023,OpenAI'sboard of directors ousted co-founder and chief executiveSam Altman. In an official post on the company's website, it was stated that "the board no longer has confidence in his ability to continue leading OpenAI".[1] The removal was predicated by employee concerns about his handling ofartificial intelligence safety,[2][3] and allegations of abusive behavior.[4] Altman was reinstated on November 22 after pressure from employees and investors.[5]
The removal and subsequent reinstatement caused widespread reactions, including impacts felt in the financial markets and technology sector. Microsoft, a partner of OpenAI, received little notice of the removal and experienced a drop in the share price of its stock. The removal also promoted interest in investigations from regulatory agencies.
OpenAI is an artificial intelligence firm founded in December 2015 as a non-profit entity.[6] The for-profit division of the organization releasedChatGPT in November 2022,[7] contributing to a resurgence in generative artificial intelligence funding.[8] The board of directors of the controlling non-profit formerly comprised chief scientistIlya Sutskever, as well asAdam D'Angelo, chief executive ofQuora, entrepreneur Tasha McCauley, andHelen Toner, strategy director for theCenter for Security and Emerging Technology.[9] As of October 2023, the company is valued atUS$80 billion[10] and was set to bring inUS$1 billion in revenue.[11] Altman has described OpenAI's relationship with Microsoft as the "bestbromance in tech".[12]
OpenAI is uniquely structured,[13] an intentional decision to avoid investor control.[14] A board of directors controls the non-profit OpenAI, Inc. The non-profit owns and controls a for-profit company itself controlling a capped-profit company, OpenAI Global, LLC and a holding company owned by employees and other investors. The holding company is the majority owner of OpenAI Global, LLC.; Microsoft owns a minority stake in the capped-profit company.[15] OpenAI's bylaws, enacted in January 2016, allow a majority of its board of directors to remove any director without prior warning or a formal meeting with written consent.[16]
Sam Altman is a co-founder of OpenAI and its former chief executive; Altman took over the company following co-chairElon Musk's resignation in 2018. Under Altman, OpenAI has shifted to becoming a for-profit entity.[6] Altman is credited with convincingMicrosoft chief executiveSatya Nadella with investingUS$10 billion in cash and computing credits into OpenAI and leading severaltender offer transactions that tripled the company's valuation.[17] Altman testified before theUnited States Congress speaking critically of artificial intelligence[18] and appeared at the2023 AI Safety Summit.[19]
In the days leading up to his removal, Altman made several public appearances, announcing theGPT-4 Turbo platform at OpenAI's DevDay conference, attendingAPEC United States 2023,[7] and speaking at an event related toBurning Man.[20]
The resignation ofLinkedIn co-founderReid Hoffman, venture capitalistShivon Zilis, and former Republican representativeWill Hurd from the board allowed the remaining members to remove Altman.[16] According toKara Swisher andThe Wall Street Journal,[21] Sutskever was instrumental in Altman's removal.[22] Disagreements over the safety of artificial intelligence divided employees prior to Altman's removal.[23] The release of ChatGPT created divisions with OpenAI as a for-profit company without considerations for the safety of artificial intelligence and a non-profit cautious of artificial intelligence's capabilities; in a staff email sent in 2019 and obtained byThe Atlantic, Altman referred to these divisions as "tribes".[24]
Prior to his removal, Altman was seeking billions from Middle Eastern sovereign wealth funds to develop an artificial intelligence chip to compete withNvidia and courtedSoftBank chairmanMasayoshi Son to develop artificial intelligence hardware with formerApple designerJony Ive. Sutskever and his allies opposed these efforts, viewing them as unjustly using the OpenAI name. Altman reduced Sutskever's role in October 2023, furthering divisions; Sutskever successfully appealed to several members of the board.[25] Swisher andThe Verge reporter Alex Heath stated that opposition to Altman's profit-driven strategy culminated in the DevDay conference[26] in which Altman announced custom ChatGPT instances.[27] According toAxios, the removal was driven by growing discontent and distrust with Altman.[28]
On November 22, 2023, reports emerged suggesting that Sam Altman's dismissal from OpenAI might be linked to his alleged mishandling of a significant breakthrough in the organization's secretive project codenamedQ*. According to sources within OpenAI, Q* is aimed at developing AI capabilities in logical and mathematical reasoning, and reportedly involves performing math on the level of grade-school students.[29] Concerns about Altman's response to this development, specifically regarding the potential safety implications of the discovery, were reportedly raised to the company's board shortly before his firing.[2][3]
A report fromThe Washington Post in December stated that OpenAI's board of directors were concerned over Altman's allegedly abusive behavior; the complaints were purportedly a major factor in his removal.[4] ThePost previously reported that Altman's alleged pattern of deception and subversiveness that ostensibly resulted in his removal fromY Combinator ultimately resulted in the board's decision to remove him.[30]
On November 17, 2023, at approximately noonPST,[32] OpenAI's board of directors ousted Altman effective immediately following a "deliberative review process". The board concluded that Altman was not "consistently candid in his communications".[33] Altman was informed of his removal five to ten minutes before it occurred[34] on aGoogle Meet[35] while watching theLas Vegas Grand Prix.[36] Within thirty minutes,[37] Sutskever invited OpenAI chairman and presidentGreg Brockman to a Google Meet to inform him of Altman's removal.[32] According to an internal memo obtained byAxios, the removal was not due to "malfeasance",[38] and OpenAI chief executiveEmmett Shear denied accusations that the removal was due to disagreements.[39] The board publicly announced Altman's removal thirty minutes later.[40]
Chief Technology OfficerMira Murati was immediately appointed to interim chief executive officer. Hours after Altman's removal, Brockman resigned as chairman,[41] joined by director of researchJakub Pachocki and researchersAleksander Mądry [pl] and Szymon Sidor.[42] During an all-hands meeting, Sutskever defended the ouster and denied accusations of a hostile takeover.[13] An OpenAI representative requested former board memberWill Hurd's presence.[43]
Tiger Global Management andSequoia Capital had attempted to reinstate Altman, according toThe Information;[44]Bloomberg News reported that Microsoft andThrive Capital were seeking Altman's reinstatement.[45] On November 18,The Verge reported that OpenAI's board of directors discussed reinstating Altman. The board agreed in principle to resign and to allow Altman to return, but missed the deadline.[46] According toThe Verge, Altman was ambivalent about returning and would seek significant changes to the company,[47] including replacing the board.[48] A list of directors had been prepared by investors in the event that the board steps down, and purportedly included formerSalesforce executiveBret Taylor.[45] According to chief strategy officer Jason Kwon, OpenAI was optimistic it could return Altman, Brockman, and other employees.[49]
On November 19, Altman and Brockman appeared at OpenAI's headquarters to negotiate, mediated by Nadella. According to Bloomberg News, Murati, Kwon, and chief operating officer Brad Lightcap were pushing for a new board of directors; it was required that the board absolve him of wrongdoing in order for Altman to be reinstated. Taylor was expected be a member of the new board[50] and Microsoft had also attempted to gain a seat.[51]The Wall Street Journal reported thatAirbnb chief executiveBrian Chesky and businesswomanLaurene Powell Jobs were also considered.[52] Murati had intended to rehire Altman and Brockman, discussing the move withAdam D'Angelo.[53]The Verge reported that Altman intended to return to OpenAI with support from Sutskever.[54]
The board chose to name formerTwitch chief executiveEmmett Shear as OpenAI's chief executive[55] instead of reinstating Altman.[52] FormerGitHub chief executiveNat Friedman and Scale AI chief executive Alex Wang reportedly rejected executive offers from the board.[56]Anthropic chief executive Dario Amodei[57] refused to negotiate a deal that could have led to a merge of the two companies.[58] In response, Microsoft appointed Altman as the chief executive of an artificial intelligence research team,[59] joined by Brockman, Pachocki, Sidor, and Madry.[60] Shear expressed interest in commercializing OpenAI with the board's support[61] and stated his intentions to begin an investigation into Altman's removal.[62]
Dozens of employees announced their resignations in response to Shear's accession.[5] The next day, a letter signed by 745[63] of OpenAI's 770 employees threatened mass resignations if the board does not resign; among the signatories was board member Sutskever, who defected from the board and publicly apologized for his participation in the board's previous actions.[64] On November 21,The Verge reported that Altman was reinstated with Taylor, D'Angelo, and economistLawrence Summers on an interim[65] board.[66] Taylor will chair the board.[67] As part of the compromise deal, Altman and Brockman will not reclaim seats on the board. Altman agreed to an internal investigation into his alleged conduct,[68] selecting two lawyers fromWilmerHale to conduct the inquiry.[69]
In May 2024, afterOpenAI's non-disparagement agreements were exposed, Altman was accused of lying when claiming to have been unaware of the equity cancellation provision for departing employees that don't sign the agreement.[71] Also in May, former board memberHelen Toner explained the board's rationale for firing Altman in November 2023. She stated that Altman had withheld information, for example about the release of ChatGPT and his ownership of OpenAI's startup fund. She said that Altman provided "inaccurate information about the small number of formal safety processes that the company did have in place". She also alleged that two executives in OpenAI had reported to the board "psychological abuse" from Altman, and provided screenshots and documentation of "lying and being manipulative in different situations". She said that many employees feared retaliation if they didn't support Altman, and that he had already been fired from Loopt because of what the management team had called "deceptive and chaotic behavior".[72][73]
The removal left OpenAI in "chaos", according toThe New York Times.[74] According to Bloomberg News, a significant number of OpenAI engineers threatened to resign if the board did not reconsider Altman's removal.[75]
According toThe Information, Altman's removal risked a share sale led by Thrive Capital valuing the company atUS$86 billion.[76] A potential second tender offer for early-stage investors was also at risk.[77]The Information later reported that Thrive Capital's tender offer will continue after Altman's reinstatement.[78]
OpenAI delayed the release of its online chatbot store as a result of Altman's removal.[79]
Shares in Microsoft fell nearly three percent following the announcement.[80] According toCoinDesk, the value ofWorldcoin, an iris biometriccryptocurrency co-founded by Altman, decreased twelve percent.[6] After hiring Altman, Microsoft's stock price rose over two percent to an all-time high.[81]
Altman's removal benefited OpenAI's competitors, such asAnthropic, Quora,Hugging Face,Meta Platforms, andGoogle.[82]The Economist wrote that the removal could slow down the artificial intelligence industry as a whole.[83]Google DeepMind received an increase in applicants, according toThe Information;Cohere and Adept engaged in an active effort to hire OpenAI employees.[84] Several investors considered writing down their OpenAI investments to zero, impacting the company's ability to raise capital.[75] Over one hundred companies using OpenAI contacted Anthropic, according toThe Information; others reached out toGoogle Cloud, Cohere, andMicrosoft Azure.[85]
According toThe Information, Altman was planning a new artificial intelligence venture with Brockman,[86] among other OpenAI employees.[87]Sequoia Capital investorAlfred Lin and venture capitalistVinod Khosla expressed interest in Altman's potential venture.[88][89]
Multiple OpenAI investors are considering legal action.[90] On December 8, theCompetition and Markets Authority announced it was beginning a preliminary investigation into Microsoft's relationship with OpenAI and its non-voting board observership.[91] Hours later, Bloomberg News reported that theFederal Trade Commission was separately examining the relationship.[92] In response, Microsoft stated that it does not hold a stake in OpenAI.[93]
Altman quipped that the OpenAI board of directors should sue him should he "start going off".[96] Former co-chairElon Musk stated the board should be transparent in its removal.[97] At the 2023 DealBook Summit, Musk called the turmoil "troubling" and that he had "mixed feelings" towards Altman.[98] Allies of Altman accused board members of staging a coup[13] and several OpenAI employees responded to a tweet Altman wrote with a heart emoji, intended to demonstrate employees who are prepared to leave.[99] Former Google chief executiveEric Schmidt wrote that Altman was a "hero to [him]" after his removal.[33]
Microsoft executives were informed of Altman's removal a minute before the announcement was made, according toAxios,[100] and investors were not given advance knowledge. Satya Nadella and chief technology officerKevin Scott expressed confidence in OpenAI following his removal,[101] though Nadella was reportedly furious, according to Bloomberg News.[25]
Y Combinator co-founderPaul Graham referred to the board's members as "misbehaving children".[28]Third Point chief executive and Microsoft shareholderDaniel S. Loeb stated that OpenAI had "stunningly poor governance".[102] French digital transition ministerJean-Noël Barrot stated that Altman is "welcome in France".[103]
Following the employee letter, Salesforce chief executiveMarc Benioff offered to employ OpenAI employees with matching salaries,[104] an offer extended by Microsoft.[105]
Wired editor-at-largeSteven Levy compared the removal of Altman to the removal ofSteve Jobs fromApple in 1985,[106] a comparison made byThe New York Times.[107]Axios posed that the board could resign, returning OpenAI to Altman.[63] Writing forThe New York Times,Ezra Klein noted the role of OpenAI's controlling non-profit in self-regulation.[108] Analyst Fred Havemeyer stated that Nadella "pulled off a coup of his own" in hiring Altman inThe Washington Post.[109] Altman was named asTime's CEO of the Year for 2023, owing partially to his removal.[110]
^Anna Tong; Jeffrey Dastin; Krystal Hu (November 22, 2023)."Exclusive: OpenAI researchers warned board of AI breakthrough ahead of CEO ouster, sources say".Reuters.Archived from the original on November 23, 2023. RetrievedJanuary 9, 2024.Some at OpenAI believe Q* (pronounced Q-Star) could be a breakthrough in the startup's search for what's known as artificial general intelligence (AGI), one of the people told Reuters. OpenAI defines AGI as autonomous systems that surpass humans in most economically valuable tasks.
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