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OpenAI reinstates Sam Altman as CEO, but problems remain

The AI startup reinstated the former CEO after firing him on Nov. 17. The news seems to end a whirlwind of events that highlighted fundamental problems at the vendor.

Sam Altman is again OpenAI's CEO following a series of events that saw him fired and rehired in a few days.

But the upheaval that roiled the creator of the widely popular ChatGPT, GPT-4 and Dall-E generative AI systems exposed some fundamental problems at the startup AI vendor.

In a post on X, formerly known as Twitter, OpenAI said it has agreed that Altman will return as CEO and that it will create a new board made up of former Salesforce co-CEO Bret Taylor, former Treasury Secretary Larry Summers and board holdover Adam D'Angelo.

For the more than 100 million ChatGPT and GPT-4 users, especially at the enterprise level, the news of Altman's return comes as a relief, Opus Research analyst Dan Miller said.

"With all that stuff that Sam demonstrated on DevDay, people were very impressed with," Miller said, referring to the media splash OpenAI made with its first major conference on Nov. 6.

"The last thing they expected was like the company would disappear," he added.

The last few days

The move to bring back the 38-year-old Altman, late on Tuesday, ends a rollercoaster of events that started late Friday with his firing when OpenAI declared that Altman was not candid with the Board.

The Board also revealed at the time that co-founder Greg Brockman would step down from the board but retain his position as president. Now Brockman is also returning to OpenAI, but it is unclear in what role.

The news shocked the tech world, including OpenAI's main financial backer, Microsoft, which had invested $13 billion in OpenAI but has only a 49% stake and no control over the board.

Meanwhile, some 700 OpenAI employees -- virtually the company's entire workforce -- signed an open letter threatening to quit if the old board did not step down and Altman was not reinstated. On Monday, Microsoft CEO Satya Nadella said Altman and Brockman would join Microsoft to lead a new internal AI team. Microsoft also offered to hire all OpenAI employees at their same pay rate.

All those arrangements now appear moot, as OpenAI plans to continue under Altman's leadership.

In response to OpenAI's post, Altman posted on X that he looks forward to returning to OpenAI and building its close partnership with Microsoft, which is the startup AI vendor's exclusive cloud provider.

Problems remain

However, the developments of the past few days also exposed a core problem within OpenAI.

"It's clear you have a board that was thinking one way philosophically and you had management and Altman and those other folks thinking they were building a startup," The Futurum Group analyst Mark Beccue said in an interview earlier in the week.

If they want a company, they have to get him back somehow.
Johna Till JohnsonFounder, Nemertes Research

Meanwhile, the Board's decision to rehire Altman shows that OpenAI realized it needed a team with him if it was to survive, Nemertes Research founder and analyst Johna Till Johnson said.

"There's just nothing there," Johnson said. "If they want a company, they have to get him back somehow."

In Microsoft's case, the tech giant was willing to keep close ties with Altman and his team in whatever way they can get them, whether working for Microsoft or back at OpenAI.

Also, OpenAI's products, services and personnel are vital parts of Microsoft's future and the tech giant likely realized it was best to remain a separate entity from OpenAI, Miller said. This is partly because OpenAI is still trying to juggle between its mission of openness and profit, and Microsoft is an investor looking to make a profit, he added.

Moreover, Altman is now in a position that if something happens again, he now understands his considerable negotiating power after Microsoft's offer to him, Johnson said.

But the probability of other problems occurring at OpenAI remains because of the basic disjuncture inherent in OpenAI's hybrid nonprofit-profit setup, in which a volunteer board dedicated to safe use of AI technology for humanity oversees a commercial vendor whose focus is rapid product development and profit, Johnson said.

OpenAI still wants to be a "rich commercial company that is a not-for-profit doing good for everyone," Johnson continued.

The AI vendor looks like it wants to put the debacle behind it as soon as possible, even seemingly joking about it in a video post on X revealing that ChatGPT with voice is available to all free users.

Users can download the app and tap the headphones icon to start a conversation. The AI vendor originally introduced the capability earlier this fall.

Esther Ajao is a TechTarget Editorial news writer covering artificial intelligence software and systems.

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