How OpenAI’s Internal Turmoil Illustrates The Growing Split In The AI Industry

Author: Rohan Saravanan

The BRB Bottomline: The abrupt firing and rehiring of OpenAI founder Sam Altman has sent shockwaves throughout the technological and business sector.

A period of instability ensued when Sam Altman was suddenly fired on November 17th prompting hundreds of employees to show their loyalty to Altman by threatening to quit which pressured the company to reinstate him after a week.

OpenAI’s Role In The AI Revolution 

OpenAI was a company founded in 2015 by Sam Altman alongside Elon Musk as a nonprofit that focused more on research and upholding values rather than trying to maximize their financial earnings. The company focused on finding ways to use AI to “benefit humanity as a whole, unconstrained by a need to generate financial return.” The exit of one of the company’s founders, Elon Musk, and the company’s growing belief that advancing their AI models and algorithms required increased computing power, and, thus, increased funding, led them to create a profits-focused branch in 2019. This branch used all the investors’ possible profits, which were restricted to a certain limit, and, then, any excess funds would be reinvested into OpenAI. At the same time, a division formed within the company between those who felt that the main objective of OpenAI should still be to focus on helping the world through AI and those who felt that new AI tools should be used to improve the consumer experience and create products which could be used to take over different fields in the tech industry. OpenAI would then make a breakthrough in the AI industry with the release of ChatGPT in 2022, prompting Microsoft to increase its investment in the company to $13 billion. OpenAI’s share sale would subsequently skyrocket to $90 billion, which started to raise more concerns from leaders in the technology sector, as well as from competitors, over OpenAI’s share of power in the AI industry. However, despite Microsoft’s financial support of OpenAI, they wouldn’t be granted a seat on the board as the original board of directors was still solely responsible for all of the company’s decisions. The overall company structure enabled the board of directors to make crucial decisions without being checked by other branches of the company, which would play a pivotal role in the sudden removal of Altman from the company.

Reasons for Altman’s Dismissal 

In November 2023, OpenAI’s board of directors made a sudden decision to oust Altman from his position as CEO. Their reason for doing so was that they believed he wasn’t truthful in all of his dialogue with the board; however, sources close to the board further elaborated that members of the board disagreed with Altman’s rapid development of OpenAI products. They felt he was not weighing enough importance on the potential risks that these products posed to humanity and was instead more focused on trying to capitalize off of the edge that OpenAI held in the developmental AI market. While AI has the power to develop treatments to sicknesses and solve problems that we have never had the capabilities to solve, it also has the power to disrupt the traditional functioning of societies because of the potential threats that AI pose to humanity, including dissemination of false information, automated impersonation that can lead to identity theft, and the widespread loss of jobs previously held by humans to AI technology. The board’s move to terminate Altman reflected the internal disarray of the company as many members of the company felt that Altman had started to drift away from OpenAI’s original mission of focusing on AI research to positively impact humanity in exchange for massive commercialization of their tools to increase the company’s profits. Regardless of the reasons at hand for his dismissal, this would lead to five days of turmoil within OpenAI which would involve the naming of two interim CEOs. 

The Unintended Effects of Altman’s Return

Altman’s Strengthened Grip On OpenAI

After Altman’s removal, investors, primarily Microsoft, made efforts to get him reinstated with little success. However, 702 of OpenAI’s 770 employees threatened to quit and join Microsoft unless Altman was re-hired and the board of directors was disbanded, thus prompting Altman to be reinstated and leading to the removal of all but one of the original members of the board. Now, one of the growing concerns with Altman’s return is the loyalty of the employees under his leadership, which effectively strengthens his control on the startup and potentially reduces the restrictions on his power as the new board of directors may become akin to a rubber stamp. True leadership is held with support from the masses, so the only way for the board to supervise Altman’s actions is to find other figures within the companies or from investors like Microsoft who can garner the respect and loyalty of OpenAI’s employees. 

The “Reshuffling” of the Board of Directors

The revamped board of directors only consists of three people instead of the original six. Furthermore, newcomers to the board include the former co-chief executive of Salesforce and chairman of Twitter, Bret Taylor, as well as former Treasury secretary and Harvard professor Lawrence Summers. The one remaining member from the original board is Adam D’Angelo, who also serves as the chief executive of Quora and was originally in support of Altman’s removal but then helped in reinstating him. With the introduction of qualified and experienced executives and the return of a veteran of the original board of directors, there is promise that, under their leadership, they will be able to uphold the company’s mission of using AI to help humanity while also regulating the power of Altman. However, in order for all this to be possible, they must earn the admiration and support of their subordinates.

The Division Within The AI Industry

This internal fiasco amongst one of the leaders of AI advancement represents the overall rift in the industry between the people that believe AI can make positive contributions to the everyday lives of people and those who believe it has the capabilities to cause more harm than good. As AI continues to progress, industry leaders must stay vigilant of these potential risks and must manage their technologies responsibly to make sure it is only used for good. Their actions will play a significant role in defining the future boundaries and benefits of AI in our society.

Take-Home Points

  • OpenAI was developed in 2015 by Sam Altman and Elon Musk and had its breakthrough in the AI industry with the creation of ChatGPT.
  • A period of chaos ensued within the company when Altman was fired after reports that he wasn’t taking enough precautions to identify and deal with the potential risks of AI development.
  • Altman was reinstated as CEO of OpenAI after a mutiny against the board of directors by 702 out of the 770 employees, which will potentially reduce the amount of checks on his power depending on the employees’ loyalty to the new board of directors.
  • The rehiring of Altman and the dismissal of the board led to the creation of a new three person board of directors which brought in Bret Taylor, who had experience in executive roles at Salesforce and Twitter, and Larwrence Summers, who had experience in the government Treasury and in academia, in addition to bringing back Quora chief executive Adam D’Angelo, who played a key role in bringing him back.
  • The internal turmoil in OpenAI represents a split in the industry between those who believe AI should be advanced to improve the quality of people’s lives, and those who believe it should be restricted to mitigate the potential risks it poses to humanity.

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