4 ms·

Baseless prediction: MSFT buys ownership of OpenAI's for/capped-profit entities, implements a more typical corporate governance structure, re-instates Altman a

Baseless prediction: MSFT buys ownership of OpenAI's for/capped-profit entities, implements a more typical corporate governance structure, re-instates Altman and Brockman. OpenAI non-profit continues to exist with a few staff and no IP but billions in cash. This whole situation is being used to drive the price down to reduce the amount the OpenAI non-profit is left with. SV don't try the "capped-profit owned by a non-profit" model again for quite some time. Maybe Altman takes some equity in the new entity.

stingraycharles 3y ago
Why would MSFT buy the for-profit entity when they already have the employees and IP?
- robbomacrae 3y ago
  For the brand, the IP, and the fact it would be pennies on the dollar.
- ytoawwhra92 3y ago
  The employees haven't left yet. Business continuity is easier to achieve if the employment arrangements don't have to change. MSFT don't have OpenAI's IP. They have an exclusive right to some of it, but there's presumably a bunch that's not accessible to them. Again, business continuity is easier if they can just grab all of that and keep everything running as normal.
  - threeseed 3y ago
    > MSFT don't have OpenAI's IP Satya Nadella just did a podcast with Kara Swisher. In it he specifically said, "we have all of the IP rights to continue the innovation". https://open.spotify.com/episode/4i4lKsKevNSGEUnuu7Jzn6 https://open.spotify.com/episode/4i4lKsKevNSGEUnuu7Jzn6
    - gnicholas 3y ago
      The right to continue innovation doesn’t mean they have perpetual rights to the underlying IP. For example, they may be able to use it for a limited period, or for certain purposes.
      - threeseed 3y ago
        Not sure if you listened to the podcast. But Satya made it crystal clear that in the event that OpenAI stopped all development tomorrow, Microsoft would be able to pick up from where they stopped. That requires full access to all of the IP. Whether it's perpetual is irrelevant because at the point at which Microsoft pulled the trigger it would effectively be like a fork. Any IP from that point is new and owned by Microsoft.
    - peteradio 3y ago
      You could say that if you "believed" you could build it from scratch. It doesn't mean they actually own the existing IP although rubes thinking about buying MSFT may think so.
      - adastra22 3y ago
        It appears they have an exclusive, irrevocable license to the existing IP. They have the GPT-4 weights, and the legal right to use them however they see fit. That's the deal with the devil OpenAI made.
        dragonwriter 3y ago
        > It appears they have an exclusive, irrevocable license to the existing IP. Appears from what? I've seen this stated several times, usually citing nothing and occasionally citing a Nadella statement from which it would be a very tenuous inference.
        adastra22 3y ago
        Non-contradicted statements made multiple times by Microsoft both now and prior to this brouhaha.
- t-writescode 3y ago
  That's a whole lot of training and server infrastructure that would have to be rebuilt - and cloning the exact existing stuff would be one heck of a corporate espionage charge, which I expect Microsoft is very avoidant of.
  - threeseed 3y ago
    Microsoft has a license to OpenAI's technologies. And they could clone the entire OpenAI Azure stack in about 10 minutes.
- camkego 3y ago
  I'm just guessing, but they probably have a restricted license to some IP, not ownership of all title and rights to all IP. Yep, those lawyers can be just as crafty as developers believe it or not. *edit: just saw it claimed below Nadella said "we have all of the IP rights to continue the innovation"* I don't know!
himaraya 3y ago
Why would the board endorse the sale?
- ytoawwhra92 3y ago
  Taking the current state of things at face value, Altman and Brockman are going to MSFT already and >90% of OpenAI staff are set to resign. If that happens they'll be forced to wind down operations. That will disintegrate their partnerships, which are their source of funding. They'll be left with IP but no staff and no resources to make any use of it. They might decide that if that's going to happen anyway they should sell now so that at least they're left with some cash to pursue their charter. Or perhaps they feel that selling the IP runs counter to their charter, in which case the whole thing goes down.
  - himaraya 3y ago
    The board likely thinks the IP gives them leverage to attract talent after the drama subsides. Otherwise, they may very well go for broke.
kumarvvr 3y ago
Hearing news about OpenAI approaching Anthropic for merger talks, it is not too far fetched to assumed that OpenAI will rid itself of the for-profit arm, that MS has 49% stake in, to MS itself. It is impossible for OpenAI to work with or for MS, with MS holding all the keys, employees, compute resources, etc. I come to understand that the 10 Billion from MS has mostly Azure credits. And for that OpenAI gave up 49% stake (in its capped, for -profit wholly owned subsidiary) along with all the technology, source code and model weights that OpenAI will make, in perpetuity. The deal itself is an amazing coup for MS, almost making the OpenAI people (I think Sam made the deal at the time), look like bumbling fools. Give away your lifetime of work for a measly 10 Billion? When they are poised to almost be hundreds of Billions worth? All these problems are the result of their non-profit holding capped-profit structure, and lack of a clear vision and misleading or misplaced end goals. 700 of the 770 employees back Sam Altman. So all the talk about engineers giving higher importance to "values" and "AI Safety" is moot. Everyone in SV is motivated by money.

stingraycharles 3y ago

Why would MSFT buy the for-profit entity when they already have the employees and IP?

robbomacrae 3y ago
For the brand, the IP, and the fact it would be pennies on the dollar.
ytoawwhra92 3y ago
The employees haven't left yet. Business continuity is easier to achieve if the employment arrangements don't have to change. MSFT don't have OpenAI's IP. They have an exclusive right to some of it, but there's presumably a bunch that's not accessible to them. Again, business continuity is easier if they can just grab all of that and keep everything running as normal.
- threeseed 3y ago
  > MSFT don't have OpenAI's IP Satya Nadella just did a podcast with Kara Swisher. In it he specifically said, "we have all of the IP rights to continue the innovation". https://open.spotify.com/episode/4i4lKsKevNSGEUnuu7Jzn6 https://open.spotify.com/episode/4i4lKsKevNSGEUnuu7Jzn6
  - gnicholas 3y ago
    The right to continue innovation doesn’t mean they have perpetual rights to the underlying IP. For example, they may be able to use it for a limited period, or for certain purposes.
    - threeseed 3y ago
      Not sure if you listened to the podcast. But Satya made it crystal clear that in the event that OpenAI stopped all development tomorrow, Microsoft would be able to pick up from where they stopped. That requires full access to all of the IP. Whether it's perpetual is irrelevant because at the point at which Microsoft pulled the trigger it would effectively be like a fork. Any IP from that point is new and owned by Microsoft.
  - peteradio 3y ago
    You could say that if you "believed" you could build it from scratch. It doesn't mean they actually own the existing IP although rubes thinking about buying MSFT may think so.
    - adastra22 3y ago
      It appears they have an exclusive, irrevocable license to the existing IP. They have the GPT-4 weights, and the legal right to use them however they see fit. That's the deal with the devil OpenAI made.
      - dragonwriter 3y ago
        > It appears they have an exclusive, irrevocable license to the existing IP. Appears from what? I've seen this stated several times, usually citing nothing and occasionally citing a Nadella statement from which it would be a very tenuous inference.
        adastra22 3y ago
        Non-contradicted statements made multiple times by Microsoft both now and prior to this brouhaha.
t-writescode 3y ago
That's a whole lot of training and server infrastructure that would have to be rebuilt - and cloning the exact existing stuff would be one heck of a corporate espionage charge, which I expect Microsoft is very avoidant of.
- threeseed 3y ago
  Microsoft has a license to OpenAI's technologies. And they could clone the entire OpenAI Azure stack in about 10 minutes.
camkego 3y ago
I'm just guessing, but they probably have a restricted license to some IP, not ownership of all title and rights to all IP. Yep, those lawyers can be just as crafty as developers believe it or not. *edit: just saw it claimed below Nadella said "we have all of the IP rights to continue the innovation"* I don't know!

himaraya 3y ago

Why would the board endorse the sale?

ytoawwhra92 3y ago
Taking the current state of things at face value, Altman and Brockman are going to MSFT already and >90% of OpenAI staff are set to resign. If that happens they'll be forced to wind down operations. That will disintegrate their partnerships, which are their source of funding. They'll be left with IP but no staff and no resources to make any use of it. They might decide that if that's going to happen anyway they should sell now so that at least they're left with some cash to pursue their charter. Or perhaps they feel that selling the IP runs counter to their charter, in which case the whole thing goes down.
- himaraya 3y ago
  The board likely thinks the IP gives them leverage to attract talent after the drama subsides. Otherwise, they may very well go for broke.

kumarvvr 3y ago

Hearing news about OpenAI approaching Anthropic for merger talks, it is not too far fetched to assumed that OpenAI will rid itself of the for-profit arm, that MS has 49% stake in, to MS itself. It is impossible for OpenAI to work with or for MS, with MS holding all the keys, employees, compute resources, etc. I come to understand that the 10 Billion from MS has mostly Azure credits. And for that OpenAI gave up 49% stake (in its capped, for -profit wholly owned subsidiary) along with all the technology, source code and model weights that OpenAI will make, in perpetuity. The deal itself is an amazing coup for MS, almost making the OpenAI people (I think Sam made the deal at the time), look like bumbling fools. Give away your lifetime of work for a measly 10 Billion? When they are poised to almost be hundreds of Billions worth? All these problems are the result of their non-profit holding capped-profit structure, and lack of a clear vision and misleading or misplaced end goals. 700 of the 770 employees back Sam Altman. So all the talk about engineers giving higher importance to "values" and "AI Safety" is moot. Everyone in SV is motivated by money.