Microsoft Seizes Opportunity Amid OpenAI Turmoil, Snags Key Staff to Bolster AI Dominance

Software major Microsoft has orchestrated a significant coup following the recent upheaval at OpenAI, securing the services of ousted CEO Sam Altman and several key personnel from the AI startup.
Satya Nadella and Microsoft leadership
The move comes as a strategic bid to prevent a potential exodus to rival companies and fortify Microsoft’s position at the forefront of the artificial intelligence race, Reuters news report said.

Microsoft has already purchased significant stake in OpenAI.

The surprising shift in leadership at OpenAI had sparked concerns about the repercussions for Microsoft, a major investor in the pioneering AI firm. With the acquisition of Altman and his team, Microsoft safeguards its prominent position in the industry, intensifying the competition against Google, owned by Alphabet, in the burgeoning AI landscape.

Shares of Microsoft experienced a notable uptick of approximately 1.5 percent in response to this development, propelling the company to a potential increase of nearly $30 billion in market value, nearly matching OpenAI’s last valuation.

Wedbush Securities analyst Dan Ives remarked, “Had Microsoft lost Altman, there were several potential destinations for him, including Amazon, Google, Apple, or other tech giants. His choice to join Microsoft strengthens the company’s standing significantly, with Altman and Brockman now spearheading AI initiatives.”

Following his unexpected departure from OpenAI, Altman is set to lead a new research division at Microsoft, accompanied by Greg Brockman and other prominent researchers, such as Szymon Sidor, formerly associated with OpenAI.

Analysts speculate that the ongoing turmoil at OpenAI could prompt more staff to migrate to Microsoft, potentially impacting the anticipated share sale of the startup, which was anticipated to occur at an $86 billion valuation. This shift might influence staff compensation plans at OpenAI, with some estimating that key employees could have received substantial payouts from the share sale.

Reports from chip industry newsletter SemiAnalysis suggested, “The subsidiary of OpenAI aimed at profit was on the verge of a secondary sale at an $80 billion+ valuation. This would have translated to significant worth, exceeding $10 million for key employees. However, this scenario is unlikely now.”

Several former OpenAI employees, including ex-interim CEO Mira Murati, expressed sentiments on the X social media platform, underscoring the pivotal role of individuals within OpenAI.

At Microsoft, the newly formed team under Altman’s guidance is expected to benefit from enhanced access to computing resources. Microsoft’s status as the second-largest U.S. cloud provider, coupled with its commitment to substantial investments in expanding datacenter capacity, positions the team favorably for their AI research endeavors.

SemiAnalysis highlighted, “If the team had pursued an independent startup route, they would have faced significant challenges in reconstructing GPT-4. However, within Microsoft, they retain access to crucial intellectual property for their future innovations.”

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