Microsoft is discussing a list of governance changes it plans to request from OpenAI’s board in order to improve the board itself and prevent the software giant, the artificial intelligence start-up’s biggest investor, from being caught flat-footed by major strategic moves.
OpenAI fired CEO Sam Altman on Friday, and since then investors have been agitating for his return. Microsoft, which offered to hire Altman, has said it is amenable to him returning to the ChatGPT maker as long as certain criteria are met. The software maker wants to sort out what it sees as the governance issues that led the existing OpenAI board to fire Altman.
The changes Microsoft is mulling may include asking OpenAI to increase the size of the board and boost the experience level required for members, according to people familiar with the company’s thinking, who asked not to be identified discussing private talks.
Microsoft’s deal with the artificial intelligence firm already required the start-up’s board to seek Microsoft approval for a merger, something which didn’t occur this past weekend when the OpenAI board sought to merge with rival AI start-up Anthropic, said the people. Microsoft will look to shore up those protections and add to the number of scenarios where it has either veto or at least notification rights.
The software company, which has put about US$13-billion into OpenAI, is largely waiting for a new board to emerge in order to discuss the changes, the people said. Altman, members of the OpenAI board and interim CEO Emmett Shear have opened negotiations aimed at possibly reinstating the ousted CEO and co-founder, according to people with knowledge of the matter. Negotiating and implementing whatever changes Microsoft wants are likely to be part of an evolving process once the issue of Altman’s return and the fate of the current board are settled.
Microsoft CEO Satya Nadella made it clear on Monday that OpenAI needs significant changes to its governance, whether Altman returns or takes up a role at Microsoft overseeing a new AI research unit, as the company and Altman announced on Sunday. Nadella expressed annoyance that OpenAI’s board gave him the briefest of notifications after it had fired Altman and before announcing his termination.
“Surprises are bad, and we just want to make sure things are done in a way that will allow us to partner well,” Nadella said in an interview with Bloomberg Television. Major changes happening without Microsoft in the loop are “not good, and we will definitely ensure that some of the changes that are needed, happen”.
Microsoft is also mulling whether it should attempt to put one of its executives on OpenAI’s board, according to the people familiar with the company’s thinking. The company will have to weigh its desire for more control with the risk that becoming directly involved in the start-up could lead to challenges from US regulators, the people said. — Reporting with Emily Chang, (c) 2023 Bloomberg LP