8 ms·

The key quote in the article is "The actual contract Microsoft has with OpenAI is not publicly available", so we have to go by these imprecise quotes uttered by

• toomuchtodo 3y ago
  I believe Satya because if he's lying, this is securities fraud.
  • dylan604 3y ago
    There's always the classic "I misspoke" backpedal available
  • mym1990 3y ago
    Securities fraud hasn’t stopped countless CEOs and people in high power positions from embellishing, lying, thieving their way to riches.
    • dylan604 3y ago
      Musk in particular hasn't stopped.
    • lazide 3y ago
      If you already have riches, it’s a good way to lose them unless you’re really careful. Musk is a poster child on this front. Lying about a material fact in a way that would be trivial to prosecute you on, especially when you have a well funded adversary it impacts, and that would be more than happy to destroy you with such a lie, is a good way to lose riches. This is more like Ukraine announcing Putin’s pending invasion in advance.
      • mym1990 3y ago
        You would be surprised how having riches does not stop people from continuing to be greedy. Weird to bring Ukraine and Russia into this...
        • lazide 3y ago
          Where did I say it didn’t? That’s actually a rather bizarre tangent. Ukraine and Russia seem quite applicable, since Mr. Nadella was basically making it clear that: 1) he knew the potential direction someone might take to harm the company he is in charge of, and 2) there were already plans/things in place to make their chances of success zero. Plans that the opponent knows about and can verify, and in Microsoft’s case they were a party to making. It’s the ‘I see what you’re doing there’ notice. You’d have to be pretty desperate to keep going after that kind of notice. Russia was, and it has cost them immensely. We’ll see how it plays out OpenAI wise. If those things weren’t all provably true, then it would be a really dumb move to do as it just exposes him to tons of direct risk with no plausible gain, as the opponent would have zero compunction in hurting him with it - and tons of ability to do so.
  • dragonwriter 3y ago
    My prior that “CEOs will not commit securities fraud if they think they will get away with it and benefit from it” is clearly much weaker than yours.
    • toomuchtodo 3y ago
      The data does not show Microsoft needs to commit fraud to benefit in this scenario. The OpenAI board is doing it to themselves, with someone lucky and savvy putting a sheet out to catch the windfall. If you don't want Microsoft to take everything, "stop hitting yourself."
      • dragonwriter 3y ago
        > The data does not show Microsoft needs to commit fraud to benefit here. So you are saying that, on “the data”, Microsoft would not be in a materially worse business position given the OpenAI chaos if the security of their rights to OpenAI models in the event of a breakdown in their existing relationship was perceived as insecure? Because otherwise the chain of reasoning is: The licensing is secure, because Nadella says so, and Nadella can be trusted because if he was lying it would be securities fraud, and Nadella wouldn't commit securities fraud even if it would benefit Microsoft’s and, therefore, his interests.
        • deleted 3y ago
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        • jacquesm 3y ago
          Microsoft is not in a fight for its life, OpenAI definitely is at this point. That alone translates into Microsoft doesn't need to commit fraud, all they need to do is sit back and watch the rest implode and come out winners. They don't even have to sue, all they need to do is do nothing and OpenAI is toast. That press release from MS the other day is a bowshot, not a promise. 'Play ball or else' with the 'or else' bit conveniently left to the imagination of the recipient.
          • 3y ago
  • comfysocks 3y ago
    I don’t think he said anything too specific about which rights. I mean, I too have the right and ability to continue the innovation.
• JanisErdmanis 3y ago
  Also someone previously mentioned that large chunck of Microsoft investment is in their compute credits. If so Microsoft effectivelly have acquired OpenAI.
• petercooper 3y ago
  I'm not familiar with contracts of this nature, but it doesn't feel far fetched that a contract involving billions of dollars might include a clause where IP can be "inherited" for continuity purposes in the case of catastrophic failure of the providing party(?)
  • deleted 3y ago
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• coolspot 3y ago
  They might have code escrow and IP transfer clause that are activated on some condition, like actual OpenAI defunction.
  • toomuchtodo 3y ago
    https://stratechery.com/2023/openais-misalignment-and-microsofts-gain/ https://stratechery.com/2023/openais-misalignment-and-micros... > This is, quite obviously, a phenomenal outcome for Microsoft. The company already has a perpetual license to all OpenAI IP (short of artificial general intelligence), including source code and model weights; the question was whether it would have the talent to exploit that IP if OpenAI suffered the sort of talent drain that was threatened upon Altman and Brockman’s removal. Indeed they will, as a good portion of that talent seems likely to flow to Microsoft; you can make the case that Microsoft just acquired OpenAI for $0 and zero risk of an antitrust lawsuit. > (Microsoft’s original agreement with OpenAI also barred Microsoft from pursuing AGI based on OpenAI tech on its own; my understanding is that this clause was removed in the most recent agreement) > Microsoft’s gain, meanwhile, is OpenAI’s loss, which is dependent on the Redmond-based company for both money and compute: the work its employees will do on AI will either be Microsoft’s by virtue of that perpetual license, or Microsoft’s directly because said employees joined Altman’s team. OpenAI’s trump card is ChatGPT, which is well on its way to achieving the holy grail of tech — an at-scale consumer platform — but if the reporting this weekend is to be believed, OpenAI’s board may have already had second thoughts about the incentives ChapGPT placed on the company (more on this below). Discussed at https://news.ycombinator.com/item?id=38346869 https://news.ycombinator.com/item?id=38346869
    • himaraya 3y ago
      The cited source indicates otherwise, that the license comes with restrictions. Ben didn't read the article. https://www.wsj.com/articles/microsoft-and-openai-forge-awkward-partnership-as-techs-new-power-couple-3092de51 https://www.wsj.com/articles/microsoft-and-openai-forge-awkw...
      • jacquesm 3y ago
• dragonwriter 3y ago
  > If OpenAI ceased to exist, can Microsoft take the code, model weights, everything of ChatGPT 4, and just continue developing it and produce a new MS-ChatGPT based on it? Well, if OpenAI magically got erased from existence, probably. More realistic scenarios, like if they continued to exist, but there was a legal dispute about breach by Microsoft of the agreements by which Microsoft got access to the IP, may be more complicated.
  • polygamous_bat 3y ago
    How much money and power would a gutted OpenAI have to devote to a protracted legal battle against Microsoft’s army of lawyers? It feels like robbing a man with cancer and hoping that they die before the case gets to the court, which feels very on brand with how Microsoft used to play things in early windows days.
    • dragonwriter 3y ago
      > How much money and power would a gutted OpenAI have to devote to a protracted legal battle against Microsoft’s army of lawyers? What happens when a “gutted" firm has assets whose value cannot be realized except by an actor with greater resources and time window, but those actors do, in fact, exist?
      • polygamous_bat 3y ago
        > assets whose value cannot be realized except by an actor with greater resources and time window Somewhat disagree on this, since open sourcing their model and code would help a lot of people in a lot of different ways.
  • jacquesm 3y ago
    > Well, if OpenAI magically got erased from existence, probably. I would not rule that out.
• shmatt 3y ago
  OpenAI won the current state of the adoption war because they focused on commercial availability and being willing to lose money on every API call more than others. There is no groundbreaking tech behind it. >Microsoft take the code, model weights, everything of ChatGPT 4, and just continue developing it and produce a new MS-ChatGPT based on it? They don't need Sam to do that, or his employees. With the current state of LLMs they can hire a few dozen people with some experience and that wouldn't be the hard part. In my mind the aggressive poaching OpenAI has been doing with Meta and Google is because they have nothing special. If they did they wouldn't need to grow to 800 headcount and still hiring. They're anticipating some company will have the next breakthrough, and they wanted every important brain on their side Having the weights to another transformer based LLM is great, but its not going to change humanity. The only thing I saw this weekend was a bunch of entrepreneurs who's new startup is 100% dependent on the GPT-4 API freaking out. Thats not ground breaking
  • realPtolemy 3y ago
    If OpenAI sucks so much, then what should i use instead?
    • shmatt 3y ago
      Well, I did say they are willing to burn money more than others - making their commercial availability better. Better yet ask yourself - will hollowed out Open AI and/or Satya be willing to lose money on every API call? Are you willing to pay the full cost of running GPT-4? Google et al have gambled the answer for most API consumers is no
  • atleastoptimal 3y ago
    OpenAI, w.r.t. the capabilities of their SOTA models are still better. Even without a loss they'd still be the leader.
  • echelon 3y ago
    > They don't need Sam to do that, or his employees. With the current state of LLMs they can hire a few dozen people with some experience and that wouldn't be the hard part. If OpenAI leadership views it as a part of their charter to release their weights, research, etc. as open source, ten other companies would immediately catch up to Microsoft.
• davesque 3y ago
  Honestly this sounds like CEO-ish for, "Yes, we can build a similar product but don't necessarily have all the IP." If there was a simple answer to the interviewer's question, he would have given it. I feel like there's a word count threshold for CEO utterances that is a pretty reliable test for bullshit.
  • TillE 3y ago
    Nadella certainly knows how to be evasive like that, but "all of the rights to continue the innovation" seems like a pretty direct claim that they can just pick up where OpenAI left off without any significant setbacks. It's business-speak rather than technical/legal, but I don't know how else someone could reasonably interpret that.
    • himaraya 3y ago
      They can iterate off ChatGPT but don't own the underlying IP?
    • davesque 3y ago
      Perhaps you can interpret it as saying, "Yes, we're a separate business, we have a right to innovate." These are the ways that people justify lying to themselves. And it's practically a CEO's job to lie to investors.
    • alasdair_ 3y ago
      "continue the innovation" doesn't really mean anything concrete.
    • pdonis 3y ago
      The underlying basis for his statement could be, not that MS has the necessary rights to all this wonderful OpenAI secret sauce, but that MS knows enough to know that there isn't any secret sauce--whatever they don't have rights to is not worth it anyway.
• righthand 3y ago
  You make that deal when your CEO Sam Altman wants to take the company private instead of being open as originally planned and sell to Microsoft eventually. I don’t know where people got the idea that Microsoft wouldn’t own OpenAI one day. It’s always been in the cards and these events just accelerated that potential outcome. If OpenAI didn’t want to sell to Microsoft why didn’t they court any other cloud platforms? Why hasn’t another cloud platform stepped up for similar deals for GPT v5? It’s all been fairly obvious IMO. The bigger question to me is if what Satya is saying is true, why even continue the charade with OpenAI’s board? Then what Satya is saying is probably just to protect the stock price.
  • vineyardmike 3y ago
    > Why hasn’t another cloud platform stepped up for similar deals for GPT v5? It’s all been fairly obvious IMO Well Microsoft could have contracted in some sort of exclusivity. Barring that, I think the obvious answer is because the leftovers aren’t that valuable. Microsoft got 49%, and full access to all models, and most profits. The remaining profits and access to the same models as your competitors isn’t worth it. Most big companies are making their LLMs, and I’ll postulate that while the tech is amazing, it’s not going to be the future where you need the One True Model. Google seems to be doing well enough with their models, Meta released pretty good models for free, Salesforce and Amazon are building out models, even smaller companies like Databricks got into the hype. Then with slowly opening access to models from Anthropic and other startups, GPT5+ alone isn’t worth it. Oracle maybe could buy access, but are they willing to outbid Microsoft? The only thing that could be worth it is the ability to run/own ChatGPT the consumer product and brand. And who would own that? Google has their own, Apple wouldn’t want it, Meta probably can’t buy it without government intervention, Salesforce maybe, but they’re not consumer focused. Amazon maybe? Oracle maybe, but same problem as Salesforce?
    • righthand 3y ago
      Exactly it’s always been a play to sell to Microsoft and incentivized toward it. And as you state the longer this goes on the less valuable GPT v5 becomes and the faster OpenAI’s darling status burns up. It’s probably already too late.
• giantrobot 3y ago
  > Why would OpenAI give away all of it's IP to Microsoft for that cheap Building an LLM is one thing, operating one is another. Without a massive discount on actual operations OpenAI didn't have much of a business. They were likely getting their Azure stuff at cost, the same as an internal Microsoft org would be charged for Azure, which is cheaper than building their own infrastructure or paying retail cloud rates. Microsoft wouldn't give them such a sweet deal without guarantees on their part. They're not going to put up billions and base products on a company that could cease to exist at any minute for a bunch of reasons.
• supergirl 3y ago
  > and just continue developing it and produce a new MS-ChatGPT based on it "just" push the state of the art. unlikely, even if they have access to everything. they need the people and even then it's unlikely.
• foobarian 3y ago
  The fact that MS actually physically owns the GPUs needed for a product of this scale is very interesting. Side rant: just when the crypto madness settled down and I hoped to score a cheap graphics card, the AI craze starts up. Oh well.
• notahacker 3y ago
  > a deal like that is surely worth more than 10b A deal like that - if true - would also imply that they should have abruptly fired Sam years ago, before it got signed off (Of course Satya's comments can also be interpreted as rather more loosely implying they're perfectly capable of maintaining what they've licensed and hiring the expertise to build their own GPT5)
  • jacquesm 3y ago
    But then OpenAI wouldn't be where it is today. So was it good or was it bad?
    • vkou 3y ago
      Someone else would have probably signed a similar deal, without OpenAI giving Microsoft the incredible leverage of owning all the IP, and being able to offer your entire staff a 20% pay raise to jump ship. If Sam was responsible for that, he smuggled one hell of a trojan horse into OpenAI, and should have been fired a long time ago.
      • vendiddy 3y ago
        Which company could that have been and how would that have turned out any differently? It seems like OpenAI needed deep pockets and access to computing power to survive. That limits the potential companies they could have cut deals with.
        • red-iron-pine 3y ago
          Aye, wasn't MS's main offer Azure credits? The compute resources that are required are massive, and if not MS then you're getting into bed with some other Big Corp, i.e. Amazon, Oracle, IBM, Google, etc.
      • jacquesm 3y ago
        You deal with the devil at your peril. But this is still an own goal by the OpenAI board, before last Friday there were no circumstances that would have pitted the board against Microsoft and now there potentially are. Bad move.
• deleted 3y ago
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• SanjayMehta 3y ago
  Microsoft probably has an escrow type deal on the code and weights: if anything goes sideways with OpenAI, Microsoft gets everything they need to take over.