Microsoft seeks full control of OpenAI

The recent deal between Microsoft and OpenAI, which grants Microsoft exclusive access to OpenAI's technology and profits, has further fueled these concerns. Only time will tell whether Microsoft's involvement with OpenAI will ultimately lead to the development of safe and beneficial AGI, or whether the company's commercial interests will take precedence

Microsoft, which already has a considerable ownership stake in OpenAI owing to its billion-dollar investment in the company, now aims to take full control of the momentum around artificial general intelligence (AGI).

This is what X owner Elon Musk feels, and is worried about "Microsoft having unfettered ownership of AGI". OpenAI was initially founded in 2015 by Sam Altman, Musk, Ilya Sutskever, and Greg Brockman as a non-profit organisation with the stated goal to "advance digital intelligence in the way that is most likely to benefit humanity as a whole".

The company assembled a team of the best researchers in the field of AI to pursue the goal of building AGI in a safe way. According to leading venture capitalist Chamath Palihapitiya, the early years of OpenAI were marked with rapid experimentation.

In 2020, bolstered by new funding, OpenAI unveiled GPT-3, a large language model (LLM) capable of understanding and generating convincing human-like text. Microsoft purchased an exclusive license to the underlying technology behind GPT-3 in 2020 after investing $1 billion in OpenAI in 2019.

“This was a watershed moment for OpenAI and the broader AI community. As the company grew, its LLMs continued to become larger and more intelligent,” Palihapitiya said in a detailed post on X.

However, it is becoming increasingly clear that OpenAI’s convoluted corporate structure led to conflicting motivations and incentives within the company. According to experts, there are two parallel battles here.

"First one is ownership of ChatGPT as a brand which has a very high brand and user value and a substantial valuation of the company is still embedded in that brand. Most users know the product and not the founder. By insisting on better governance and a board seat, Microsoft is ensuring that their investment is not eroded," Vineet Nayar, former CEO of HCL Technologies, said.

Moreover, history shows us that technology brands and products outlast founders. "Thus I do not see a risk to the brand in the near-term irrespective of who is the CEO. It needs stronger governance, which Microsoft is pushing for," he added. The second battle is about people and ideas. Microsoft has smartly created an alternative landing structure to ring fence that risk.

"I am less excited about the possibility of this team recreating the magic like ChatGPT as I have rarely seen technology founders create a path-breaking second innovation. Thus, it's a cheap acquisition of talent to drive new innovation within Microsoft, however recreating old magic will not be that easy," Nayar elaborated.

Earlier this year, Microsoft extended its long-term partnership with OpenAI through a new "multiyear, multibillion dollar investment". The deal will see Microsoft increase its investments in the development and deployment of supercomputing systems to assist OpenAI’s research. The key part of the deal means that Microsoft is the exclusive cloud partner for OpenAI, and Microsoft’s cloud services will power all OpenAI workloads across products, API services, and research.

Rumours about the deal suggested Microsoft may receive 75 per cent of OpenAI’s profits until it secures its investment return and a 49 per cent stake in the company, The Verge had reported.