OpenAI appoints new boss as Sam Altman joins Microsoft in Silicon Valley twist

© Reuters. FILE PHOTO: Sam Altman, CEO of Microsoft-backed OpenAI and ChatGPT creator speaks during a talk at Tel Aviv University in Tel Aviv, Israel June 5, 2023. REUTERS/Amir Cohen/File Photo

By Jeffrey Dastin, Anna Tong, Akash Sriram and Krystal Hu

SAN FRANCISCO (Reuters) -OpenAI named ex-Twitch boss Emmett Shear as interim CEO, while outgoing chief Sam Altman moved to backer Microsoft (NASDAQ:MSFT), in a surprise turn of events that clouded the future of the startup at the heart of the artificial intelligence boom.

The appointments, settled late on Sunday, followed Altman's abrupt ousting just days earlier as CEO of the ChatGPT maker and ended speculation that he could return.

By Monday, close to all of OpenAI's more than 700 employees threatened to quit in a letter demanding the resignation of the board and reinstatement of Altman and former President Greg Brockman, according to a copy viewed by Reuters and a person familiar with the matter. The document was signed by employees including OpenAI chief scientist Ilya Sutskever, the board member who fired Altman.

"I deeply regret my participation in the board's actions. I never intended to harm OpenAI. I love everything we've built together and I will do everything I can to reunite the company," Sutskever said in a post on social media platform X, formerly known as Twitter, on Monday.

Hours later, Altman and Microsoft CEO Satya Nadella sought to quell fears of a collapse at OpenAI. Altman wrote on X that his top priority "remains to ensure OpenAI continues to thrive" and said he was "committed to fully providing continuity of operations.

Nadella, during a CNBC interview, said he was open to staff staying at OpenAI or coming to Microsoft. He said governance at the ChatGPT maker needed to change no matter where Altman ended up.

Microsoft has rushed in to attract some of the biggest names that left OpenAI, including co-founder Brockman, to keep key talent out of the hands of rivals including Alphabet (NASDAQ:GOOGL)'s Google and Amazon.com (NASDAQ:AMZN) while seeking to stabilize the startup in which it invested billions of dollars.

OpenAI's newly appointed interim head moved quickly to dismiss speculation that its board ousted Altman due to a dispute over the safety of powerful AI models. Shear vowed to open an investigation into the firing, consider new governance for OpenAI and continue its path of making available technology like its viral chatbot.

"I'm not crazy enough to take this job without board support for commercializing our awesome models," Shear said.

The startup dismissed Altman on Friday after a "breakdown of communications," according to an internal memo seen by Reuters.

Among various reported calls to find a successor, OpenAI's board of directors approached rival Anthropic's CEO about replacing Altman and potentially merging the two AI startups, two people briefed on the matter told Reuters. Anthropic's CEO Dario Amodei declined.

The organization that governs OpenAI is a nonprofit. Its four-person board as of Friday consisted of three independent directors holding no equity in OpenAI, as well as chief scientist Sutskever.

In the letter calling for the board's resignation, employees also demanded the appointment of two new independent directors, such as former Salesforce (NYSE:CRM) CEO Bret Taylor and Will Hurd, a former United States representative.

"Your actions have made it obvious that you are incapable of overseeing OpenAI," the employees said in the letter.

"Microsoft has assured us that there are positions for all OpenAI employees at this new subsidiary should we choose to join," they added.

An OpenAI spokesperson referred Reuters to Altman's comment on the goal to make the startup thrive.

DIFFERENT IDEALS

For years, OpenAI employees have been split between different ideals, according to two people familiar with the matter.

Some - including many who joined before 2022 - are focused on building artificial general intelligence (AGI) safely with sufficient guard rails, while others recruited after the success of ChatGPT are more keen on quickly building and launching products in the tradition of Silicon Valley startups, one of the people said.

Shear said prior to his appointment as interim CEO that he was "in favor of slowing down" AI's rapid development.

Analyst Richard Windsor, of Radio Free Mobile, said in a note: "This weekend was simply the detonation of a bomb that has been waiting to go off."

Altman is becoming CEO of a new research group inside Microsoft and will be joined by other departing OpenAI colleagues who quit following his ouster, Nadella said in posts on X.

Those joining Altman at Microsoft include senior researchers Szymon Sidor and Jakub Pachocki, according to Brockman.

Microsoft has bet heavily on the startup, releasing what it called AI copilots to business customers based on OpenAI's technology. OpenAI researchers have viewed Microsoft's vast reserves of computing power as essential to the development of superintelligent machines.

SemiAnalysis, a research and consulting firm, said in a note on Monday that any attempt by OpenAI's nonprofit board to slow down AI's development out of safety concerns had backfired.

"Now the world’s largest corporations without clear oversight/commitment to safe and responsible AGI is in the drivers seat," the note said.

Microsoft had supported a return by Altman to OpenAI, according to sources, a move that seemed likely only hours prior to Monday's announcements.