Microsoft's Shadow Looms Over OpenAI

H. Defendants Seize then Neuter OpenAI, Inc.’s Board

122. In a series of extraordinary developments, Microsoft and Altman leveraged their positions to force a majority of OpenAI, Inc.’s Board to resign on November 22, 2023, and replaced them with underqualified and compliant allies handpicked by Altman and blessed by Microsoft.

123. The Board had consisted of Dr. Sutskever, Brockman, Altman, plus Helen Toner (“Toner”), Adam D’Angelo (“D’Angelo”), and Tasha McCauley (“McCauley”). In addition to serving on the Board, Toner is a researcher and advisor for the Center for the Governance of AI (“GovAI”) and the Director of Strategy at Georgetown’s Center for Security and Emerging Technology. McCauley is a Senior Management Scientist at RAND Corporation, a non-profit which specializes in public policy decision making. Like Toner, McCauley is also an advisor for GovAI.

124. The choice to include on OpenAI, Inc.’s Board multiple academics and public policy experts with deep AI policy experience, most of whom had no financial stake in OpenAI, was deliberate. This composition of financially disinterested Board members with strong records of public service ensured that the Board would put the non-profit’s principals of openness and safety before financial success.

125. On November 17, 2023, OpenAI, Inc.’s Board dismissed Altman as CEO and from the Board, announcing he was fired following “a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI.” Brockman was also dismissed from the Board, but not as OpenAI, Inc.’s CTO.

126. It has been reported that indeed the Board fired Altman because he had deliberately misrepresented what was happening at OpenAI, Inc. and explicitly lied to the Board to obstruct its ability to carry out its oversight duties. The Board was likewise concerned by the numerous side hustles and conflicts of interest Altman had and his purposeful withholding of information necessary for the Board to evaluate the scope and extent of his self-dealing and myriad conflicts.

127. News reports further suggest Altman’s firing was due in part to OpenAI, Inc.’s breakthrough in realizing AGI and Altman’s prioritizing profit over safety and the non-profit’s founding principles. After Altman was fired, his close associate Brockman chose to immediately leave with him.

128. On information and belief, when Microsoft’s CEO Nadella learned of Altman’s firing, he was furious. Reportedly, as a 49% shareholder in OpenAI’s for-profit arm(s), Nadella felt Microsoft should have been consulted before the decision was made. However, at this time, aside from Altman and Brockman, OpenAI, Inc.’s Board, on information and belief, had no ties to Microsoft. Rather, Altman was the primary liaison between Microsoft and OpenAI, Inc. and with him gone, Microsoft’s continued exclusive access to the non-profit’s valuable technology was in jeopardy.

129. Microsoft’s response was swift. Nadella invited Altman and Brockman to lead a new Microsoft AI research lab, unbound by the constraints of OpenAI, Inc.’s humanitarian mission and the three actively solicited OpenAI, Inc.’s employees to leave OpenAI to join Microsoft’s new lab.

130. Microsoft was confident that, through its substantial ownership in OpenAI’s for-profit arm, it could completely sequester OpenAI, Inc.’s research and technology should the non-profit cease to exist. Indeed, during an interview shortly after Altman’s firing, Nadella stated:

We [now] have all the IP rights and all the capability. If OpenAI disappeared tomorrow, I don’t want any customer of ours to be worried about it quite honestly, because we have all of the rights to continue the innovation. Not just to serve the product, but we can go and just do what we were doing in partnership ourselves. We have the people, we have the compute, we have the data, we have everything

131. Despite Microsoft’s bold statements, it apparently still wanted its man Altman on the inside as OpenAI, Inc.’s CEO. In the days following his firing, OpenAI, Inc.’s Board faced mounting pressure from Microsoft to reinstate Altman. Nadella even bragged about Microsoft’s influence over the non-profit: “We are in there. We are below them, above them, around them.”

132. Microsoft indeed had leverage. On information and belief, at the time of Altman’s ouster, Microsoft had only paid a fraction of a $13 billion investment commitment it had made to OpenAI. And if Microsoft were to withhold its cloud computing system on which OpenAI, Inc. was reliant, the non-profit would be effectively incapacitated.

133. The pressure on the Board from Altman, Brockman, and Microsoft continued until November 21, 2023, when Altman was reinstated as CEO just days after his dismissal, and Brockman as CTO. Upon his return, Altman took the opportunity to clean house and purge those who ousted him, demanding the resignation of Toner, McCauley, and Dr. Sutskever from the Board. Notably, D’Angelo—the sole board member to remain after Altman’s reinstatement—is a tech CEO and entrepreneur.

134. On information and belief, Altman then handpicked a new Board that lacked the technical expertise and substantial background in AI governance, which the previous Board had by design. The new members were reportedly “big fans of Altman.”

135. Microsoft too obtained an influential observer seat on the Board from which it could keep a close eye on its non-profit golden goose. Though just recently, on July 9, 2024, Microsoft relinquished its seat amid scrutiny and pressure from antitrust agencies in the U.S. and Europe suspicious of its all-too-cozy relationship with OpenAI.[8]

136. With the reinstatement of Altman and the restructuring of the Board, OpenAI, Inc.’s once carefully crafted non-profit structure is now compromised by a fully profit-driven CEO (Altman) and CTO (Brockman), a compliant Board with inferior technical expertise and almost no AI-governance experience, and a trillion-dollar pro-profit partner (Microsoft).

137. The loss of the Board’s technical expertise in AI, neutrality, and commitment to OpenAI, Inc.’s non-profit purposes are particularly compromising as it is the Board that determines whether OpenAI has attained AGI, which, as detailed above, OpenAI, Inc. had previously excluded from its license to Microsoft. Given Microsoft and the OpenAI profit machine’s enormous financial interest in keeping the technology closed to the public, OpenAI, Inc.’s newly captured, conflicted, and compliant Board will have every reason to delay ever making a finding that OpenAI, Inc. has attained AGI. OpenAI’s for-profit apparatus may now operate fully unchecked.

[8] Orru & Laursen, Microsoft Quits OpenAI’s Board Amid Antitrust Scrutiny, Wall Street Journal (July 10, 2024), https://www.wsj.com/tech/ai/microsoft-withdraws-from-openaisboard-amid-antitrust-scrutiny-aab6ff1e?reflink=desktopwebshare_permalink.