OpenAI’s unusual nonprofit structure led to dramatic ouster of sought-after CEO
SAN FRANCISCO (AP) — OpenAI, the company behind ChatGPT, has made headlines after the ousting of its sought-after CEO, Sam Altman, creating an uncertain future for the organization. Unlike tech giants such as Google and Facebook, OpenAI was initially established as a nonprofit, aiming to avoid being influenced by commercial interests. However, its transition to a for-profit model while maintaining a controlling nonprofit shareholder and board of directors has resulted in a unique and complicated corporate structure.
The removal of Altman by four OpenAI board members, including the company’s chief scientist, two external tech entrepreneurs, and an academic, sparked an employee revolt. This incident has shed light on the atypical arrangement that sets OpenAI apart from other tech enterprises and has now placed the organization’s future in jeopardy.
While major tech companies like Meta, Facebook’s parent company, and Google grant ultimate control to founders through voting shares not available to others, OpenAI’s structure differs significantly. OpenAI’s primary shareholder and board of directors remain the nonprofit OpenAI Inc., which played a pivotal role in ousting Altman.
OpenAI’s mission focuses on safely developing highly advanced artificial intelligence surpassing human intelligence. However, debates have emerged regarding the company’s expanding commercial success and whether it aligns with its stated goals.
Sarah Kreps, director of Cornell University’s Tech Policy Institute, highlighted the flaw in OpenAI’s board structure, stating, What was revealed with this board structure is they just idealistically thought, well, we’re aligned, and it won’t become a problem because we’re going to stay aligned.
The board has refrained from disclosing specific reasons for Altman’s termination, prompting speculation and uncertainty. Nonetheless, Altman swiftly found a new role as CEO at Microsoft Corp., a company that has invested billions in OpenAI. Microsoft has also extended job offers to all of OpenAI’s 770 employees, which could potentially lead to a mass exodus from the organization. This would leave OpenAI severely depleted, with its existing technology remaining exclusively licensed to Microsoft.
OpenAI’s announcement regarding Altman’s dismissal highlighted his alleged lack of candor and inability to lead. However, the vague statement did not provide examples or specifics. The decision has led to criticism of the board’s cautious approach to AI and its impact on the company’s future.
The board now comprises Ilya Sutskever, an OpenAI board member, and key figure behind the upheaval, along with Adam D’Angelo, CEO of Quora, tech entrepreneur Tasha McCauley, and Helen Toner of the Georgetown Center for Security and Emerging Technology. Notably absent are former board members Reid Hoffman, co-founder of LinkedIn, former Congressman Will Hurd, Neuralink executive Shivon Zilis, and Greg Brockman, who resigned following Altman’s removal.
OpenAI’s structure and tensions between its nonprofit and for-profit arms can be traced back to the departure of Elon Musk, Tesla CEO, from the board in 2018. Musk cited a potential conflict of interest between Tesla and OpenAI.
As OpenAI navigates the aftermath of Altman’s dismissal and the employee revolt, the future of the organization remains uncertain. The decisions made in recent days may have jeopardized OpenAI’s ability to implement a pro-safety philosophy and maintain a united company.
In this fast-paced and rapidly evolving field, the repercussions of OpenAI’s unique structure and recent events may influence the future direction of the organization and the field of artificial intelligence as a whole.
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Associated Press Technology Writers Matt O’Brien in Providence, Rhode Island, and Michael Liedtke in San Francisco contributed to this story.
