Sam Altman back at OpenAI: how Microsoft got its hands on ChatGPT

This article was published on BFMTV in French. Following is the translated text.

The American giant has demonstrated its omnipotence over its partner OpenAI, by reinstalling Sam Altman and his teams, against the initial advice of the board of directors.

It only took a few days for Microsoft to take OpenAI back into its own hands, reinstalling Sam Altman at its head with a reshuffled board of directors, a clear demonstration of the power of the tech giants in the face of even the most famous start-ups’ desire for independence.

Microsoft CEO Satya Nadella pulled off a masterstroke on Monday by announcing the hiring of Sam Altman, who had just been ousted from OpenAI, the artificial intelligence (AI) nugget behind ChatGPT.

The organization’s board of directors obviously thought it could free itself from the IT giant that was nonetheless its partner, whom it hadn’t even warned of the dismissal. A serious mistake, according to analysts. The days when an engineer in a garage could single-handedly build a global giant, like Steve Jobs and Bill Gates, seem to be over.

“Microsoft has all the rights”

For the past two days, Microsoft, which is counting heavily on the sale of OpenAI products to revive its fortunes, has been reminding people who holds the power. In an interview on Tuesday evening with star journalist Kara Swisher, Satya Nadella made it very clear: “Microsoft has all the rights”.

“There is no OpenAI without Microsoft’s massive support. We love their independence, but… we have all the property rights. If, tomorrow, OpenAI disappears, none of our customers need worry, we have all the rights to continue the innovations and not just distribute them. Everything we do in partnership with OpenAI, we can do ourselves. We have the IT, the data, the people. We have everything. We’re self-sufficient” in AI, he enumerated.

And he warned that if Sam Altman were to return to the helm of the company, they would “[ensure] that [they would] never return to such a situation, where [they would] have such surprises”, assuring that their “interests were solid”. “As I said, we have every right,” he insisted.

“That’s what the OpenAI board didn’t understand. It’s stupid to think that a company with a little technology can make all the difference”, he slipped in, still smiling.

Clear victory

All analysts agree: Microsoft is in a much stronger position than last week vis-à-vis OpenAI, with which its relationship seemed unclear, without it being known which depended on the other.

Over the past seven years, the American giant has injected billions of dollars into OpenAI (10 to 13 billion, according to the press), largely in the form of credits for the use of its supercomputers. It then began marketing OpenAI products, including ChatGPT, by integrating them into its own software (Word, Excel, its Bing search engine, Outlook, etc.).

Microsoft even owns a minority stake in OpenAI’s commercial arm, of an unknown amount – 49% according to the press. But the Group had no seat on the board of directors of the non-profit umbrella organization, an unusual situation.

By marketing ChatGPT in its own software, Microsoft has in fact become so powerful that it competes with its own partner, bound by an exclusive long-term contract.

As a result, OpenAI is still far from turning a profit, while Microsoft saw its Azure cloud revenues jump by almost 30% in the third quarter. Technically, OpenAI also risks becoming dependent on Azure, the server network on which it is entirely hosted.

“With Sam Altman back on the board, Microsoft will own OpenAI,” says Dan Ives of Wedbush Securities in an interview.
“The board of directors looked like eight-year-olds playing chess when Grand Master Nadella came in to take over,” he says.

“Frederick Havemeyer, of the Macquarie Group, agrees: “It’s clearly a positive thing for Microsoft. He will continue to have access to OpenAI’s intellectual property, with a board of directors more open to commercialization and the acceleration of innovation. In AI, Microsoft is taking the lead of the pack, up against the other big cloud groups, Google and Amazon, who are all looking to develop AI.”

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Image credit: Photo by Andrew Neel on Unsplash

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