Microsoft emerged as a big winner from the OpenAI turmoil. After hiring outgoing CEO Sam Altman and other essential startup employees to prevent a possible departure from competitors and strengthen its lead in the artificial intelligence race, Microsoft (MSFT.O) emerged on Monday as the clear winner of the turmoil at OpenAI.
Since Friday, OpenAI has been in turmoil, which has sparked concerns about what might happen to Microsoft. Microsoft has invested billions of dollars in the company and uses its technology for most of its AI products, including its Copilot AI assistant.
Analysts noted that the decision guaranteed “the golden child of AI” will remain with Microsoft as it battles Alphabet (GOOGL.O)-owned Google to rule the emerging market.
Microsoft’s stock increased by 2% to a record high before retreating somewhat from the gains. At present rates, the corporation was expected to increase its market value by around $30 billion. That was almost exactly the price OpenAI raised during its most recent fundraising.
After his abrupt departure that stunned the IT world, Altman will head a new research team at the software behemoth. Other researchers, like Szymon Sidor and fellow OpenAI cofounder Greg Brockman, will accompany him.
“Sam Altman and Greg Brockman’s hiring by Microsoft has allowed them to turn a crisis into an opportunity,” stated Gil Luria, senior software analyst at D.A. Davidson.
“Assuming they will be able to hire many more from the OpenAI team, they will have taken over the key development path for artificial intelligence.”
According to a letter seen by Reuters, roughly 500 workers at the business also threatened to quit unless the board resigned and Brockman and Altman were reinstated.
On Monday, the employees wrote a letter stating, “Microsoft has assured us there are positions for all OpenAI employees at this new subsidiary should we choose to join.” “Your actions have made it obvious that you are incapable of overseeing OpenAI,” the employees said.
Microsoft or OpenAI did not immediately answer the remarks in the letter. Analysts predicted that a personnel exodus would occur because of worries about governance and how it may affect OpenAI’s employee payouts, which were anticipated to be impacted by a share sale for $86 billion.
“The for-profit OpenAI affiliate was going to conduct a secondary with a valuation of over $80 billion. For prominent staff, these ‘Profit Participation Units’ were expected to be worth over $10 million. To put it succinctly, this is not going to happen right now,” the chip trade publication SemiAnalysis stated.
Given that Microsoft is the second-largest cloud provider in the United States and has committed to investing billions to increase the capacity of its data centers, the Altman-led team there will also probably have easier access to the processing power required.
Had the group chosen the startup route, they would have needed to invest substantial time in reconstructing GPT-4. Rather, SemiAnalysis stated that they will get access to a large portion of the intellectual property needed for upcoming products at Microsoft.