Microsoft’s handling of the recent chaos at OpenAI has had a positive impact on the company’s stock but may have a lasting effect on CEO Satya Nadella’s legacy. Despite Microsoft Vice Chairman and President Brad Smith stating that the turmoil at OpenAI had little to do with a dangerous AI discovery, the firing and subsequent rehiring of OpenAI CEO Sam Altman have left a mark on the company’s reputation. While Nadella’s management of the situation may have resulted in a $63 billion increase in market capitalization for Microsoft, it remains to be seen how history will remember his role in the OpenAI saga.
According to Fortune, Wedbush Securities analyst Dan Ives believes that Nadella’s handling of the situation secured the loyalty of both Altman and OpenAI co-founder Greg Brockman. Ives suggested that if Microsoft had lost Altman, he may have been eagerly sought after by other tech giants such as Amazon, Google, or Apple. These comments were made prior to OpenAI’s decision to rehire Altman and Brockman on November 29.
Altman’s memo to OpenAI employees confirmed his return as CEO, along with Mira Murati resuming her role as CTO. Altman also announced the appointment of a new board consisting of Bret Taylor as Chair, Larry Summers, and Adam D’Angelo. While Microsoft did not receive an official voting seat on the board, the company will maintain a non-voting observer role. Altman expressed gratitude to Microsoft, specifically praising Satya Nadella, Kevin Scott, Amy Hood, and Brad Smith for their unwavering support and emphasizing that partnering with Microsoft was the right choice.
However, the lack of transparency surrounding Altman’s firing and the significant investments made by Microsoft in OpenAI raise concerns about the level of trust and respect between the two entities. Microsoft’s investment of potentially over $13 billion in OpenAI without prior notification is seen as a sign of disrespect and raises questions about the communication between the former OpenAI board and Microsoft. This could potentially tarnish Nadella’s reputation and his management of the situation.
Another consequence of the OpenAI saga is the loss of the element of surprise for Microsoft. Going forward, every move made by OpenAI will be closely scrutinized, eliminating the advantage that Microsoft once had as an insider. Despite these setbacks, the significant growth of Microsoft stock under Nadella’s leadership, with a staggering 916% increase since he became CEO in 2014, has earned him the support of the board and shareholders.
As the OpenAI saga continues to unfold, it is clear that Nadella faces challenges in maintaining his legacy amidst the controversies surrounding Altman’s firing and the lack of transparency. However, given Microsoft’s remarkable stock performance and Nadella’s overall success as CEO, it is likely that he will be granted some leniency. The future of OpenAI and its relationship with Microsoft will be closely watched by investors and industry observers alike.
In conclusion, while Microsoft’s handling of the OpenAI situation has had a positive impact on its stock, it remains to be seen how it will affect CEO Satya Nadella’s legacy. The lack of transparency and disrespect shown to Microsoft during Altman’s firing raise concerns about Nadella’s management of the situation. However, given Microsoft’s outstanding stock performance under his leadership, Nadella may ultimately be given the benefit of the doubt. The repercussions of the OpenAI saga and its impact on Microsoft’s partnership will continue to be closely monitored in the coming months.
