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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
As stories of value destruction go, OpenAI’s is among the greats. The generative artificial intelligence company was on the cusp of selling shares at an $86bn valuation. One internal coup later and its chances of reaching such heights have nosedived.
Examples of companies wrecking their own multibillion-dollar values are relatively rare. WeWork scorched its $47bn valuation with a fanciful listing document that laid bare the extent of corporate overspend. Jack Ma’s speech criticising Chinese regulators led to the suspension of a planned listing for Ant, the fintech he founded that was due to raise more than $30bn. The difference in OpenAI’s case is that the action came from a group with no financial interest in the company.
OpenAI’s board controls a non-profit created to benefit humanity, not shareholders. Its decision to fire chief executive and co-founder Sam Altman, mull a reinstatement and then opt to replace him with a new CEO has fractured the company. One board member, Ilya Sutskever, has already expressed regret. OpenAI’s relationship with Microsoft, its biggest investor, is about to get more complicated.
Microsoft has acted as a backstop in some ways. By hiring Altman to lead a new AI research team, it has neutralised the threat of rivals offering him a job or the means to start a new company. Microsoft’s share price rose more than 2 per cent on Monday, wiping out the ill effects of the chaotic weekend. It has declared confidence in its “product road map” with OpenAI.
However, the fact that it had no say over Altman’s exit and was given little warning will not foster good relations with the board.
The structure of OpenAI, including its leadership, is still in flux. It has a new leader who has expressed concerns about the speed of AI development. That suggests it will not pursue revenue-accelerating goals, including becoming a platform for customers.
Microsoft is an investor, customer and competitor. It already has a licence for OpenAI’s technology. The tech is knitted into Microsoft’s productivity software. OpenAI, which is lossmaking, also depends on Microsoft’s cloud computing resources and the $10bn investment it pledged. Losses last year were reported to exceed half a billion dollars. The balance of power is not in OpenAI’s favour.
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