OpenAI shows AI may have inherent governance problems

OpenAI shows AI may have inherent governance problems

The future of OpenAI, whose ChatGPT started the arms race in artificial intelligence, has become even more bleak. A majority of its employees called for the resignation of its board after Sam Altman was removed as CEO over issues with the rapid commercialization of its technology.

The conflict highlights the awkward oversight of some leading companies in AI that could impact the future of the technology. And there are signs that OpenAI’s board will not relent despite the employee revolt.

Here’s the latest: More than 700 of OpenAI’s 770 employees – including Ilya SutskeverThe chief scientist and board member—who had initially pushed for Altman’s removal—demanded that the board resign. Altman is still trying Return as CEO and is inside I talk to the company, OpenAI board had approached a top competitor, AnthropicAccording to the information, about the merger. Marc Benioff of Salesforce OpenAI is trying to lure employees with attractive financial offers.

OpenAI’s dilemma: Commenters mentioned the company unusual, contradictory, structure, a non-profit with a board Mission for the betterment of humanity Oversees a for-profit arm backed by Microsoft and venture capital firms including Thrive Capital and Khosla Ventures.

overall enterprise goals The goal is to create an artificial general intelligence, a highly autonomous system that “outperforms humans in most economically valuable tasks” but “benefits all of humanity.” The commercial arm of OpenAI was created to support that extremely expensive goal, but it is bound by limits on the profits investors can receive, as well as no governance rights for investors. This is why Microsoft, Thrive and others have no direct impact on how the company is run.

Ironically, Altman helped create this setup – and ultimately became its victim.

This is not the only unusual corporate structure in the AI ​​industry. Anthropic, started by a dozen ex-OpenAI employees concerned about their former employer’s race to profit, has positioned itself as a B Corp, or Public Benefit CorporationIt aims to balance the interests of a wide range of stakeholders.

There is also a so-called assurance of long term benefits It includes AI ethicists and other experts and is allowed to elect a majority of the company’s directors. (That said, one of Anthropic’s board seats is held by an investor, though this is subject to change.)

But OpenAI’s structure may lead to an irreparable conflict. Investors, including Thrive, are still pushing to reinstate Altman as CEO, as well as employees and Sutskever.

Still, the employee letter noted an ominous development for that camp: “You also informed the leadership team that allowing the company to be destroyed ‘would be consistent with the mission.'” The report shows that, The actions, despite the possibility of investors suing the board, have hardened the resolve of the three remaining directors – and that will be the case if OpenAI fails.

X sued a media watchdog over research on its advertising. Elon Musk’s social network threatened to take Media Matters to court over the group’s claims that the company places ads next to anti-Semitic content. The findings, along with controversy over Musk’s recent posts, prompted big-name advertisers like Apple and IBM to halt their spending on X; The company said that Media Matters had manipulated its algorithms to support its findings.

US regulators put more pressure on crypto giants. The Justice Department is demanding Binance fined $4 billionThe world’s largest crypto exchange will settle an investigation into money laundering and fraud allegations, according to Bloomberg. And this SEC files lawsuit against KrakenA rival, claiming it operates an unregistered securities exchange.

Citigroup is preparing to lay off hundreds of managers. long awaited stepAnnounced on Monday, it is the latest step in a plan by bank CEO Jane Fraser to simplify the Wall Street giant’s structure and reduce costs. Battling a slowdown in deals and high interest rates, Citi has already laid off more than 7,000 employees.

Wall Street braces for disappointing housing data. Existing home sales, due at 10 a.m. Eastern, are expected to fall 13 year low Rising mortgage rates make it more expensive for buyers – especially tiny house hunter – Out of the market.

Microsoft, OpenAI’s biggest backer, is flying high, with shares of the tech giant hitting a 22-month high on Monday.

Microsoft CEO Satya Nadella has been on a media tour since hiring now-ousted OpenAI boss Sam Altman and another co-founder Greg Brockman, trying to cement his position as an artificial intelligence leader. A big talking point: how the company structured its deal with the start-up and accessed its intellectual property.

Altman and Brockman will run Microsoft AI Research Laboratory. After most of OpenAI’s remaining employees threatened to quit, Altman and Brockman were ultimately able to recruit hundreds more people from their former employer. As Karen Weiss reports for The Times, this would allow Microsoft to essentially “rebuild OpenAI inside Microsoft and not waste any more time or money.”

Some investors want OpenAI co-founder to return, Which includes Thrive Capital, Khosla Ventures and Tiger Global Management protect their investment, (Vinod Khosla also called out OpenAI’s interim CEO Emmett Shear resign “Before he became OpenAI’s sole employee.”)

Even Nadella is open to this possibility — with one big caveat. When Altman, the company’s main contact, was fired, Microsoft had no official talks with the board. Nadella said,with Kara Swisher” Podcast If Altman and Brockman return to OpenAI, “we will make sure that the governance is in place so that we have more sureties and guarantees so that we don’t have any surprises.”

But Nadella was adamant that he had the tools to do anything new. People familiar with the deal told The Times that Microsoft reserved the rights to OpenAI’s intellectual property, as well as copies of the source code for its key systems and the rights to “weights” who dictate the results of the system after it is trained on the data. Have done it. This is partly as a defense to the fact that it has no control over the start-up’s board.

There is one big exception. This includes the sacredness of OpenAI’s work: achieving artificial general intelligence, or AGI. OpenAI defines that advancement as “a highly autonomous system that outperforms humans at the most economically valuable tasks.” To realize the promise of AGI, it needs immense compute power, which is what Microsoft is providing. WARNING: AGI IS Off-limits for Microsoft,

Still, Microsoft’s IP deal could be troublesome. Scott Syfax, a corporate governance expert, told DealBook that if the deal jeopardizes the nonprofit’s tax-exempt status, it could raise alarm bells with regulators. Another area Syfax is looking at: the valuation Microsoft has placed on OpenAI following its investment and whether it acquired the IP at a fair price.

Some veterans of the Silicon Valley start-up wars applaud Microsoft’s maneuvering, “If you had told me 10 years ago that a group of the smartest engineers in the country would threaten, ‘Do what I say or I’ll go to work at Microsoft,’ I wouldn’t have believed you,” Bill Gurley, a Benchmark executive. General partner and investor in Grubhub, Uber and Zillow, Posted on xAdding “Much credit to Satya”.

but other Wonder what Microsoft was thinking First, by betting so big on OpenAI “without any real governance control.”

, betsy stevensonAn economist at the University of Michigan who worked in the Obama administration, On the gap between Americans’ perceptions of the economy and their actual experiences.

Goldman’s first big bet on sports sponsorship is fizzling out. The bank will not renew its endorsement deal with golfer Patrick Cantlay, DealBook’s Lauren Hirsch first reported.

The deal was part of the bank’s consumer promotion. Goldman signed a three-year deal with Cantlay in 2020, partly to help build brand awareness of its online consumer banking service Marcus. Cantlay, currently ranked fifth in the world, wore a Marcus-branded cap during the tournament and the two sides signed a new one-year deal beginning in 2023.

But Goldman has pulled out of retail banking. The bank sold its majority stake in Marcus and restructured the business to refocus on its traditional investment banking and trading services. “We continually evaluate the firm’s partnerships, and at this time, our logo will no longer appear on their caps,” Goldman Sachs spokesman Tony Fratto told DealBook.

Cantlay and Goldman will still have some links. A person familiar with the matter told DealBook that he may attend further events at the bank. And Cantlay and Goldman director Mark Flaherty both sit on the board of directors of the PGA Tour, which is trying to partner with Saudi Arabia’s sovereign wealth fund and attract new investors.



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