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Annoyed by "first and then"! Microsoft wants to revamp OpenAI's board

via:财联社     time:2023/11/22 14:01:01     readed:175

Microsoft owns about 49% of OpenAI but has no control over its corporate governance, and last weekend's decision by OpenAI's board to oust its CEO Altman apparently caught Microsoft off guard. This also makes the world's second largest technology giant by market value is now embarking on a major transformation of OpenAI's governance structure, expanding its voice on the OpenAI board!

According to people familiar with the matter,Microsoft is discussing a list of governance changes it plans to require of the OpenAI Board to improve board operations and prevent Microsoft from being caught off-guard again in major strategic moves for OpenAI in the future.

OpenAI fired CEO Sam Altman on Friday, and since then investors have been agitating for the "father of ChatGPT" to return to OpenAI.

Microsoft, which has offered to hire Altman, said it was willing to bring him back to OpenAI as long as certain conditions were met. Regardless of the outcome, Microsoft wants to address the governance issues that led the existing OpenAI board to fire Altman.

According to people familiar with Microsoft's thinking, the changes Microsoft is considering could include requiring OpenAI to expand the size of its board and increase the experience requirements for board members.

According to people familiar with the matter, Microsoft's agreement with OpenAI already requires the startup's board of directors to seek approval from Microsoft before making acquisitions. Over the weekend, news broke that OpenAI's board was seeking a merger with rival artificial intelligence startup Anthropic, apparently without Microsoft's approval. Microsoft will seek to strengthen these protections and increase the number of scenarios in which it has veto power or at least the right to know.

These people also said that Microsoft is currently mainly waiting for a new OpenAI board to be formed in order to discuss these changes. Altman, OpenAI board members and interim CEO Emmett Shear have begun talks,The goal is to reinstate Altman as CEO and co-founder of OpenAI.

Once the dust settles on Altman's return and the fate of the current board, negotiations and implementation of any changes Microsoft wants are likely to take place gradually.

Annoyed by "ask questions first and ask questions later"

Microsoft CEO Satya Nadella made it clear Monday that OpenAI needs a major overhaul of its governance, whether Altman ends up returning to run OpenAI or leading a new AI research division at Microsoft, as Microsoft and Altman announced Sunday.

It is reported that Nadella is angry about the OpenAI board after firing Altman,He was only sent a brief note of irritation before his dismissal was officially announced.

In an interview with the media, Nadella said, "Surprises are always bad, we just want to make sure that things are handled in a way that allows us to work well together." No major change should happen without Microsoft's participation, and we will make sure that some necessary changes take place."

Microsoft is also considering whether it should try to put an executive on OpenAI's board, according to people familiar with the company's thinking. Microsoft must weigh its desire for more control against the risk that its direct involvement in the startup could raise questions from U.S. regulators, these people said.

Some legal experts have said there are few outside forces that can force OpenAI to change its peculiar management practices, even if Microsoft, which is a major financial backer, has no power to do so.

Alexander Reid, a lawyer at BakerHostetler who advises nonprofits, said that because OpenAI is a nonprofit, only a judge or state attorney general can force its current board to step down or make changes. State attorneys general, often after discovering fraud or illegal conflicts of interest, can enact measures ranging from changes in leadership to shutting down organizations altogether.

OpenAI's for-profit arm is fully controlled by a nonprofit, and it has a special governance structure that preserves the nonprofit's core mission, management and oversight functions, while raising funds to fulfill its mission. According to OpenAI's bylaws, only the directors can vote to remove or elect new board members. Such arrangements, known as "self-perpetuating boards," are common in nonprofits, Reid said.

Of course, given Microsoft's huge influence in the aftermath of this OpenAI palace drama, its attitude is clearly still likely to ultimately determine the fate of OpenAI. More than 700 OpenAI employees have signed a letter threatening resignation, demanding that the company's board resign and reinstate its two co-founders, Altman and Brockman, or else they will join Microsoft.


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