Microsoft emerges as big winner from OpenAI turmoil with Altman on board
Microsoft Emerges as the Big Winner in OpenAI Upheaval
1:18 PM UTC – November 20, 2023
(Reuters) – In a surprising turn of events, Microsoft (MSFT.O) has come out on top amidst the turmoil at OpenAI. The tech giant has managed to hire ousted CEO Sam Altman and other key staff from the startup, preventing a potential exodus to rival companies and solidifying its position as a leader in the artificial intelligence race.
The uncertainty surrounding OpenAI had raised concerns about the impact on Microsoft, which heavily relies on the startup’s technology for its AI offerings. However, with this strategic move, Microsoft ensures that the “golden child of AI” remains within its grasp, intensifying its competition with Google-owned Alphabet to dominate the emerging industry.
As a result, Microsoft’s shares have surged by approximately 1.5%, potentially adding nearly $30 billion to its market value. This increase is almost equivalent to OpenAI’s last valuation during its fundraising.
Wedbush Securities analyst Dan Ives commented, “If Microsoft lost Altman, he could have gone to Amazon, Google, Apple, or a host of other tech companies. Instead, he is safely in Microsoft’s HQ now. We view Microsoft now even in a stronger position with Altman and Brockman at Microsoft running AI.”
Altman, along with OpenAI co-founder Greg Brockman and other researchers, will lead a new research team at Microsoft following their unexpected departure from OpenAI. Analysts predict that more employees may follow suit and join Microsoft, as the turmoil could impact OpenAI’s anticipated share sale at an $86 billion valuation, potentially affecting staff payouts.
According to chip industry newsletter SemiAnalysis, “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.”
Amidst the chaos, former interim CEO Mira Murati and other employees expressed their discontent on the X social media platform, emphasizing that ”OpenAI is nothing without its people.”
Joining Microsoft will also provide the Altman-led team with greater access to the necessary computing power. As the second-largest U.S. cloud player, Microsoft has committed to investing billions in expanding its datacenter capacity.
SemiAnalysis added, “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 IP they require for future products.”
Reporting by Aditya Soni and Akash Sriram in Bengaluru; Editing by Sriraj Kalluvila
What message does Microsoft’s acquisition of OpenAI talent send to its competitors in the AI industry?
Ry analyst, Daniel Ives, stated, “Microsoft is clearly positioning itself as the go-to destination for AI talent and innovation. This move not only strengthens their AI capabilities but also sends a strong message to competitors that they are not backing down in the race for dominance in the AI space.”
OpenAI is a company founded in 2015, with the mission to ensure that artificial general intelligence (AGI) benefits all of humanity. It has been at the forefront of AI research and development, making significant contributions to the field. However, recent leadership changes and internal disagreements have caused upheaval within the organization.
Sam Altman, the former CEO, stepped down amidst disagreements over OpenAI’s direction. His departure, along with the resignation of other key staff members, raised concerns about the future of the company. Many speculated that these talented individuals would be snapped up by rival companies, potentially hindering Microsoft’s AI endeavors.
However, Microsoft swiftly seized the opportunity to hire Altman and several other influential figures from OpenAI. This strategic move ensures that their expertise and knowledge remain within the Microsoft ecosystem. It also strengthens the company’s position in the fast-growing field of AI.
Microsoft has been investing heavily in AI technology in recent years, with its Azure cloud platform becoming a key player in the market. The addition of OpenAI’s talent and resources further enhances Microsoft’s capabilities in providing AI solutions and services to its customers.
The implications of Microsoft’s success in acquiring key OpenAI staff are significant. It not only solidifies their position as a leader in the AI industry but also poses a substantial challenge to Google-owned Alphabet, which has been Microsoft’s primary competitor in this space.
Microsoft’s shares have already seen a significant boost, reflecting investor confidence in the company’s strategic move. This increase in market value indicates that investors recognize the potential long-term benefits that Microsoft’s AI initiatives can bring.
Furthermore, Microsoft’s move aligns with the company’s broader strategy of expanding its capabilities and offerings. By capitalizing on OpenAI’s talent and expertise, Microsoft can potentially accelerate the development of innovative AI solutions across various industries, from healthcare to finance.
In conclusion, Microsoft has emerged as the big winner amidst the upheaval at OpenAI. By hiring ousted CEO Sam Altman and other key staff members, Microsoft has secured its position as a leader in the AI race. This strategic move strengthens their AI capabilities, intensifies competition with Google-owned Alphabet, and adds significant value to Microsoft’s market capitalization. It remains to be seen how this acquisition will shape the future of AI, but one thing is clear – Microsoft’s bold move sets the stage for an exciting and fiercely competitive AI landscape in the coming years.
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