Microsoft Emerges as Victorious Beneficiary of OpenAI Turmoil with Altman at Helm

Microsoft Emerges as Victorious Beneficiary of OpenAI Turmoil with Altman at Helm

Microsoft Secures Key Staff from OpenAI, Strengthens Position in AI Race

By Aditya Soni

In a surprising turn of events, Microsoft has emerged as the victor in the recent upheaval at OpenAI, hiring ousted CEO Sam Altman and other key staff members from the startup. This move by Microsoft aims to prevent a potential exodus of talent to rival companies and bolster its position in the fiercely competitive artificial intelligence (AI) race.

The turmoil at OpenAI since Friday had raised concerns about the impact on Microsoft, which heavily relies on the pioneer’s technology for its AI offerings and has invested billions of dollars in the company. However, Microsoft’s strategic move ensures that the “golden child of AI” remains within its grasp, allowing it to continue its battle against Alphabet-owned Google for dominance in the nascent industry.

Following the announcement, Microsoft’s shares rose by approximately 1.5%, potentially adding nearly $30 billion to its market value. This increase in value is almost equivalent to OpenAI’s last fundraising valuation, highlighting the significance of this acquisition for Microsoft.

Analysts expressed relief at Microsoft’s ability to retain Altman, as his departure could have led him to join rival tech companies such as Amazon, Google, or Apple. With Altman and Greg Brockman, another OpenAI co-founder, leading a new research team at Microsoft, the company’s position in the AI field is further strengthened.

The recent developments at OpenAI may also lead to more employees jumping ship and joining Microsoft. The turmoil could impact a planned share sale by OpenAI at an $86 billion valuation, potentially affecting staff payouts at the startup.

“The OpenAI for-profit subsidiary was about to conduct a secondary at a $80 billion+ valuation. These ‘Profit Participation Units’ were going to be worth $10 million+ for key employees. Suffice it to say this is not going to happen now,” stated chip industry newsletter SemiAnalysis.

Several employees, including former interim CEO Mira Murati, emphasized the importance of people in OpenAI through posts on the X social media platform.

At Microsoft, Altman and his team will have greater access to the necessary computing power, as the company is the second-largest player in the U.S. cloud market and has committed to significant investments in expanding its datacenter capacity.

“If the team went down the startup path, they would have had to spend significant time rebuilding GPT-4. Instead, at Microsoft, they will have access to much of the intellectual property they require for future products,” explained SemiAnalysis.

This unexpected move by Microsoft not only secures top talent but also enhances its position in the AI race, signaling its determination to stay at the forefront of technological innovation.

(Reporting by Aditya Soni and Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila)