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If OpenAI remains a 501(c)(3) charity, then any employee of Microsoft on the board will have a fiduciary duty to advance the mission of the charity, rather than

If OpenAI remains a 501(c)(3) charity, then any employee of Microsoft on the board will have a fiduciary duty to advance the mission of the charity, rather than the business needs of Microsoft. There are obvious conflicts of interest here. I don't expect the IRS to be a fan of this arrangement.

flagrant_taco 3y ago
I don't expect the government to regulate any of this aggressively. AI is much to important to the government and military to allow pesky conflicts of interest to slow down any competitive advantage we may have.
- dgrin91 3y ago
  If you think that OpenAI is the Gov's only source of high quality AI research then I have a bridge to sell you.
  - jakderrida 3y ago
    If you think the person you're replying to was talking about regulating OpenAI specifically and not the industry as a whole, I have ADHD medicine to sell you.
    - swores 3y ago
      The context of the comment thread you're replying to was a response to a comment suggesting the IRS will get involved in the question of whether MS have too much influence over OpenAI, it was not the subject of general industry regulation. But hey, at least you fitted in a snarky line about ADHD in the comment you wrote while not having paid attention to the 3 comments above it.
      - freedomben 3y ago
        if up-the-line parent wasn't talking about regulation of AI in general, then what do you think they meant by "competitive advantage"? Also, governments have to set policy and enforce that policy. They can't (or shouldn't at least) pick and choose favorites. Also GP snark was a reply to snark. Once somebody opens the snark, they should expect snark back. It's ideal for nobody to snark, and big for people not to snark back at a snarker, but snarkers gonna snark.
      - jakderrida 3y ago
        [flagged]
        swores 3y ago
        I think the comment you had replied to was equally unwarranted, no need to tie me to them.
        jakderrida 3y ago
        I'm sorry. I was just taking the snark discussion to the next level. I thought going overboard was the only way to convey that there's no way I'm serious.
        rsrsrs86 3y ago
        When did this become a boy-girlfriend issue?
  - flagrant_taco 3y ago
    My comment here was actually meant to talk about AI broadly, though I can get the confusion here as the original source thread here is about OpenAI. I also don't expect the government to do anything about the OpenAI situation, to be clear. Though my read is actually that the government had to be evolved behind closed doors to move so quickly to get Sam back to OpenAI. Things moved much too quickly and secretively in an industry that is obviously of great interest to the military, there's no way the feds didn't put a finger on the scale to protect their interests at which point they wouldn't come back in to regulate.
baking 3y ago
My guess is that the non-profit has never gotten this kind of scrutiny now and the new directors are going to want to get lawyers involved to cover their asses. Just imagine their positions when Sam Altman really does something worth firing. I think it was a real mistake to create OpenAI as a public charity and I would be hesitant to step into that mess. Imagine the fun when it tips into a private foundation status.
- danaris 3y ago
  Well, I think that's really the question, isn't it? Was it a mistake to create OpenAI as a public charity? Or was it a mistake to operate OpenAI as if it were a startup? The problem isn't really either one—it's the inherent conflict between the two. IMO, the only reason to see creating it as a 501(c)(3) being a mistake is if you think cutting-edge machine learning is inherently going to be targeted by people looking to make a quick buck off of it.
  - blackoil 3y ago
    OpenAI the charity would have survived only as an ego project for Elon doing something fun with minor impact. Only the current setup is feasible if they want to get the kind of investment required. This can work if the board is pragmatic and has no conflict of interest, so preferably someone with no stake in anything AI either biz or academic.
    - baking 3y ago
      I think the only way this can end up is to convert to a private foundation and make sizable (8 figures annually) grants to truly independent AI safety (broadly defined) organizations.
  - baking 3y ago
    To create a public charity without public fundraising is a no go. Should have been a private foundation because that is where it will end up.
  - ToucanLoucan 3y ago
paulddraper 3y ago
What if I told you...Bill Gates was/is on the board of the non-profit Bill and Melinda Gates Foundation? Lol HN lawyering is hilarious.
- fatbird 3y ago
  Indeed, it is hilarious. The Foundation has nothing to do with MS and can't possibly be considered a competitor, acquisition target, supplier, or any other entity where a decision for the Foundation might materially harm MS (or the reverse). There's no potential conflict of interest between the missions of the two. Did you think OP meant there was some inherent conflict of interest with charities?
  - paulddraper 3y ago
    Have you seen OpenAI's current board? Explain how an MS employee would have greater conflict of interest.
    - uxp8u61q 3y ago
      Conflict of interest with what? The other board members? That's utterly irrelevant. Look up some big companies boards some day. You'll see.
      - paulddraper 3y ago
        See earlier > If OpenAI remains a 501(c)(3) charity, then any employee of Microsoft on the board will have a fiduciary duty to advance the mission of the charity, rather than the business needs of Microsoft. There are obvious conflicts of interest here. https://news.ycombinator.com/item?id=38378069 https://news.ycombinator.com/item?id=38378069
brookst 3y ago
There’s no indication a Microsoft appointed board member would be a Microsoft employee (though the they could be of course), and large nonprofits often have board members that come from for-profit companies. I don’t think the IRS cares much about this kind of thing. What would be the claim? They OpenAI is pushing benefits to Microsoft, a for-profit entity that pays taxes? Even if you assume the absolute worst, most nefarious meddling, it seems like an issue for SEC more than IRS.
TigeriusKirk 3y ago
Larry Summers is in place to effectively give the govt seal of approval on the new board, for better and worse.
- ilrwbwrkhv 3y ago
  Isn't he a big Jeffrey Epstein fanboy? Ethical AGI is in safe hands. https://www.thecrimson.com/article/2023/5/5/epstein-summers-meeting/ https://www.thecrimson.com/article/2023/5/5/epstein-summers-...
  - futuretaint 3y ago
    nothing screams 'protect public interest' more than Wall Streets biggest cheerleader during 2008 financial crisis. who's next, Richard S. Fuld Jr ? Should the Enron guys be included ?
  - deleted 3y ago
    [deleted]
  - kossTKR 3y ago
    It's obvious this class of people love their status as neu-feudal lords above the law living as 18th century libertines behind closed doors. But i guess people here are either waiting for wealth to trickle down on them or believe the torrent of psychological operations so much peoples minds close down when they intuit the circular brutal nature of hierarchical class based society, and the utter illusion democracy or meritocracy is. The uppermost classes have been trickters through all of history. What happened to this knowledge and the countercultural scene in hacking? Hint; it was psyopped in the early 90's by "libertarianism" and worship of bureaucracy to create a new class of cybernetic soldiers working for the oligarchy.
    - ilrwbwrkhv 3y ago
      I agree. The best young minds grinding leet code to get into Google is the biggest symptom of it.
stikit 3y ago
OpenAI is not a charity. Microsoft's investment is in OpenAI Global, LLC, a for-profit company. From https://openai.com/our-structure https://openai.com/our-structure - First, the for-profit subsidiary is fully controlled by the OpenAI Nonprofit. We enacted this by having the Nonprofit wholly own and control a manager entity (OpenAI GP LLC) that has the power to control and govern the for-profit subsidiary. -Second, because the board is still the board of a Nonprofit, each director must perform their fiduciary duties in furtherance of its mission—safe AGI that is broadly beneficial. While the for-profit subsidiary is permitted to make and distribute profit, it is subject to this mission. The Nonprofit’s principal beneficiary is humanity, not OpenAI investors. -Third, the board remains majority independent. Independent directors do not hold equity in OpenAI. Even OpenAI’s CEO, Sam Altman, does not hold equity directly. His only interest is indirectly through a Y Combinator investment fund that made a small investment in OpenAI before he was full-time. -Fourth, profit allocated to investors and employees, including Microsoft, is capped. All residual value created above and beyond the cap will be returned to the Nonprofit for the benefit of humanity. -Fifth, the board determines when we've attained AGI. Again, by AGI we mean a highly autonomous system that outperforms humans at most economically valuable work. Such a system is excluded from IP licenses and other commercial terms with Microsoft, which only apply to pre-AGI technology.
- ezfe 3y ago
  The board is the charity though, which is why the person you're replying to made the remark about MSFT employees being appointed to the board
  - UrineSqueegee 3y ago
    A charity is a type of not-for-profit organisation however the main difference between a nonprofit and a charity is that a nonprofit doesn't need to reach a 'charitable status' whereas a charity, to qualify as a charity, needs to meet very specific or strict guidelines
    - ezfe 3y ago
      Yes, I misspoke - I meant nonprofit
voxic11 3y ago
Even if the IRS isn't a fan, what are they going to do about it? It seems like the main recourse they could pursue is they could force the OpenAI directors/Microsoft to pay an excise tax on any "excess benefit transactions". https://www.irs.gov/charities-non-profits/charitable-organizations/intermediate-sanctions-excess-benefit-transactions https://www.irs.gov/charities-non-profits/charitable-organiz...
mwattsun 3y ago
Microsoft doesn't have to send an employee to represent them on the board. They could ask Bill Gates.
- deleted 3y ago
  [deleted]
- murakamiiq84 3y ago
  Actually I think Bill would be a pretty good candidate. Smart, mature, good at first principles reasoning, deeply understands both the tech world and the nonprofit world, is a tech person who's not socially networked with the existing SF VCs, and (if the vague unsubstantiated rumors about Sam are correct) is one of the few people left with enough social cachet to knock Sam down a peg or two.
  - lucubratory 3y ago
    Larry Summers, Bill Gates, if they keep on like that they can fill the board with all of Epstein's "associates".
pc86 3y ago
Others have pointed out several reasons this isn't actually a problem (and that the premise itself is incorrect since "OpenAI" is not a charity), but one thing not mentioned: even if the MS-appointed board member is a MS employee, yes they will have a fiduciary duty to the organizations under the purview of the board, but unless they are also a board member of Microsoft (extraordinarily unlikely) they have no such fiduciary duty to Microsoft itself. So in the also unlikely scenario that there is a vote that conflicts with their Microsoft duties, and in the even more unlikely scenario that they don't abstain due to that conflict, they have a legal responsibility to err on the side of OpenAI and no legal responsibility to Microsoft. Seems like a pretty easy decision to make - and abstaining is the easiest unless it's a contentious 4-4 vote and there's pressure for them to choose a side. But all that seems a lot more like an episode of Succession and less like real life to be honest.
- throwoutway 3y ago
  It's still a conflict of interest. One that they should avoid. Microsoft COULD appoint someone who they like and shares their values, that is not a MSFT employee. That would be a preferred approach but one that I doubt a megacorp would take
  - ghaff 3y ago
    Both profit and non-profit boards have members that have potential conflicts of interest all the time. So long as it’s not too egregious no one cares, especially not the IRS.
- dragonwriter 3y ago
  > and that the premise itself is incorrect since "OpenAI" is not a charity OpenAI is a 501c3 charity nonprofit, and the OpenAI board under discussion is the board of that charity nonprofit. OpenAI Global LLC is a for-profit subsidiary of a for-profit subsidiary of OpenAI, both of which are controlled, by their foundational agreements that gie them legal existence, by a different (AFAICT not for-profit but not legally a nonprofit) LLC subsidiary of OpenAI (OpenAI GP LLC.)
- oatmeal1 3y ago
_b 3y ago
> There are obvious conflicts of interest here. There are almost always obvious conflicts of interest. In a normal startup, VCs have a legal responsibility to act in the interest of the common shares, but in practice, they overtly act in the interest of the preferred shares that their fund holds.
- hyperhopper 3y ago
  The more and more I see the way complex share structures are used, the more I think they should be outlawed
bradleybuda 3y ago
Major corporate boards are rife with "on paper" conflicts on interest - that's what happens when you want people with real management experience to sit on your board and act like responsible adults. This happens in every single industry and has nothing to do with tech or with OpenAI specifically. In practice, board bylaws and common sense mean that individuals recuse themselves as needed and don't do stupid shit.
- iandanforth 3y ago
  "In practice, board bylaws and common sense mean that individuals ... don't do stupid shit." Were you watching a different show than the rest of us?
  - badloginagain 3y ago
    And we're seeing the result in real-time. Stupid shit doers have been replaced with hopefully-less-stupid-shit-doers. It's a real shame too, because this is a clear loss for the AI Alignment crowd. I'm on the fence about the whole alignment thing, but at least there is a strong moral compass in the field- especially compared to something like crypto.
    - deleted 3y ago
      [deleted]
    - alsetmusic 3y ago
      > at least there is a strong moral compass in the field Is this still true when the board gets overhauled after trying to uphold the moral compass.
      - saalweachter 3y ago
        And when the CEO's other thing is a cryptocurrency?
        3y ago
hackernewds 3y ago
Not to mention, the mission of the Board cannot be "build safe AGI" anymore. Perhaps something more consistent with expanding shareholder value and capitalism, as the events of this weekend has shown. Delivering profits and shareholder value is the sole and dominant force in capitalism. Remains to be seen whether that is consistent with humanity's survival
boh 3y ago
Whenever there's an obvious conflict, assume it's not enforced or difficult to litigate or has relatively irrelevant penalties. Experts/lawyers who have a material stake in getting this right have signed off on it. Many (if not most) people with enough status to be on the board of a fortune 500 company tend to also be on non-profit boards. We can go out on a limb and suppose the mission of the nonprofit is not their top priority, and yet they continue on unscathed.
- hinkley 3y ago
  Do you remember before Bill Gates got into disease prevention he thought that “charity work” could be done by giving away free Microsoft products? I don’t know who sat him down and explained to him how full of shit he was but they deserve a Nobel Peace Prize nomination. Just because someone says they agree with a mission doesn’t mean they have their heads screwed on straight. And my thesis is that the more power they have in the real world the worse the outcomes - because powerful people become progressively immune to feedback. This has been working swimmingly for me for decades, I don’t need humility in a new situation.
- Xelynega 3y ago
  > Experts/lawyers who have a material stake in getting this right have signed off on it. How does that work when we're talking about non-profit motives? The lawyers are paid by the companies benefitting from these conflicts, so how is it at all reassuring to hear that the people who benefit from the conflict signed off on it? > We can go out on a limb and suppose the mission of the nonprofit is not their top priority, and yet they continue on unscathed. That's the concern. They've just replaced people who "maybe" cared about the mission statement with people who you've correctly identified care more about profit growth than the nonprofit mission.
varelse 3y ago
[dead]
jklein11 3y ago
I'm a little bit confused, are you saying that the IRS would have some sort of beef with employees of Microsoft serving on the board of a 501(c)(3)?
zerohalo 3y ago
OpenAI's charter is dead. I expect future boards to amend it.
- dragonwriter 3y ago
  Its useful PR pretext for their regulatory advocacy, and subjective enough that if they are careful not to be too obvious about specifically pushing one company’s commercial interest, they can probably get away with it forever, so why would it be any deader than when Sam was CEO before and not substantively guided by it.
- ric2b 3y ago
  People keep saying this but is there any evidence that any of this was related to the charter?
  - Xelynega 3y ago
    The only evidence I have is that the board members that were removed had less business connections than the ones that replaced them. The point of the board is to ensure the charter is being followed, when the biggest concern is "is our commercialization getting in the way of our charter" what else does it mean to replace "academics" with "businesspeople"?
augustulus 3y ago
how can they not remain a charity?
627467 3y ago
I don't get the drama with "conflict of interests"... Aren't board members generally (always?) in representation of major shareholders? Isn't it obvious that shareholders have interests that are likely to be in conflict with each other or even the own organization? Thats why board members are supposed to check each other, right?
- Xelynega 3y ago
  OpenAI is a non profit and the board members are not allowed to own shares in the for profit. That means the remaining conflicts are when the board has to make a decisions between growing the profit or furthering the mission statement. I wouldn't trust the new board appointed by investors to ever make the correct decision in these cases, and they already kicked out the "academic" board members with the power to stop them.
mattmcknight 3y ago
The non-profit could sell off its interest in the for-profit company and use the money for AGI research.

flagrant_taco 3y ago

I don't expect the government to regulate any of this aggressively. AI is much to important to the government and military to allow pesky conflicts of interest to slow down any competitive advantage we may have.

dgrin91 3y ago
If you think that OpenAI is the Gov's only source of high quality AI research then I have a bridge to sell you.
- jakderrida 3y ago
  If you think the person you're replying to was talking about regulating OpenAI specifically and not the industry as a whole, I have ADHD medicine to sell you.
  - swores 3y ago
    The context of the comment thread you're replying to was a response to a comment suggesting the IRS will get involved in the question of whether MS have too much influence over OpenAI, it was not the subject of general industry regulation. But hey, at least you fitted in a snarky line about ADHD in the comment you wrote while not having paid attention to the 3 comments above it.
    - freedomben 3y ago
      if up-the-line parent wasn't talking about regulation of AI in general, then what do you think they meant by "competitive advantage"? Also, governments have to set policy and enforce that policy. They can't (or shouldn't at least) pick and choose favorites. Also GP snark was a reply to snark. Once somebody opens the snark, they should expect snark back. It's ideal for nobody to snark, and big for people not to snark back at a snarker, but snarkers gonna snark.
    - jakderrida 3y ago
      [flagged]
      - swores 3y ago
        I think the comment you had replied to was equally unwarranted, no need to tie me to them.
        jakderrida 3y ago
        I'm sorry. I was just taking the snark discussion to the next level. I thought going overboard was the only way to convey that there's no way I'm serious.
      - rsrsrs86 3y ago
        When did this become a boy-girlfriend issue?
- flagrant_taco 3y ago
  My comment here was actually meant to talk about AI broadly, though I can get the confusion here as the original source thread here is about OpenAI. I also don't expect the government to do anything about the OpenAI situation, to be clear. Though my read is actually that the government had to be evolved behind closed doors to move so quickly to get Sam back to OpenAI. Things moved much too quickly and secretively in an industry that is obviously of great interest to the military, there's no way the feds didn't put a finger on the scale to protect their interests at which point they wouldn't come back in to regulate.

baking 3y ago

My guess is that the non-profit has never gotten this kind of scrutiny now and the new directors are going to want to get lawyers involved to cover their asses. Just imagine their positions when Sam Altman really does something worth firing. I think it was a real mistake to create OpenAI as a public charity and I would be hesitant to step into that mess. Imagine the fun when it tips into a private foundation status.

danaris 3y ago
Well, I think that's really the question, isn't it? Was it a mistake to create OpenAI as a public charity? Or was it a mistake to operate OpenAI as if it were a startup? The problem isn't really either one—it's the inherent conflict between the two. IMO, the only reason to see creating it as a 501(c)(3) being a mistake is if you think cutting-edge machine learning is inherently going to be targeted by people looking to make a quick buck off of it.
- blackoil 3y ago
  OpenAI the charity would have survived only as an ego project for Elon doing something fun with minor impact. Only the current setup is feasible if they want to get the kind of investment required. This can work if the board is pragmatic and has no conflict of interest, so preferably someone with no stake in anything AI either biz or academic.
  - baking 3y ago
    I think the only way this can end up is to convert to a private foundation and make sizable (8 figures annually) grants to truly independent AI safety (broadly defined) organizations.
- baking 3y ago
  To create a public charity without public fundraising is a no go. Should have been a private foundation because that is where it will end up.
- ToucanLoucan 3y ago

paulddraper 3y ago

What if I told you...Bill Gates was/is on the board of the non-profit Bill and Melinda Gates Foundation? Lol HN lawyering is hilarious.

fatbird 3y ago
Indeed, it is hilarious. The Foundation has nothing to do with MS and can't possibly be considered a competitor, acquisition target, supplier, or any other entity where a decision for the Foundation might materially harm MS (or the reverse). There's no potential conflict of interest between the missions of the two. Did you think OP meant there was some inherent conflict of interest with charities?
- paulddraper 3y ago
  Have you seen OpenAI's current board? Explain how an MS employee would have greater conflict of interest.
  - uxp8u61q 3y ago
    Conflict of interest with what? The other board members? That's utterly irrelevant. Look up some big companies boards some day. You'll see.
    - paulddraper 3y ago
      See earlier > If OpenAI remains a 501(c)(3) charity, then any employee of Microsoft on the board will have a fiduciary duty to advance the mission of the charity, rather than the business needs of Microsoft. There are obvious conflicts of interest here. https://news.ycombinator.com/item?id=38378069 https://news.ycombinator.com/item?id=38378069

brookst 3y ago

There’s no indication a Microsoft appointed board member would be a Microsoft employee (though the they could be of course), and large nonprofits often have board members that come from for-profit companies. I don’t think the IRS cares much about this kind of thing. What would be the claim? They OpenAI is pushing benefits to Microsoft, a for-profit entity that pays taxes? Even if you assume the absolute worst, most nefarious meddling, it seems like an issue for SEC more than IRS.

TigeriusKirk 3y ago

Larry Summers is in place to effectively give the govt seal of approval on the new board, for better and worse.

ilrwbwrkhv 3y ago
Isn't he a big Jeffrey Epstein fanboy? Ethical AGI is in safe hands. https://www.thecrimson.com/article/2023/5/5/epstein-summers-meeting/ https://www.thecrimson.com/article/2023/5/5/epstein-summers-...
- futuretaint 3y ago
  nothing screams 'protect public interest' more than Wall Streets biggest cheerleader during 2008 financial crisis. who's next, Richard S. Fuld Jr ? Should the Enron guys be included ?
- deleted 3y ago
  [deleted]
- kossTKR 3y ago
  It's obvious this class of people love their status as neu-feudal lords above the law living as 18th century libertines behind closed doors. But i guess people here are either waiting for wealth to trickle down on them or believe the torrent of psychological operations so much peoples minds close down when they intuit the circular brutal nature of hierarchical class based society, and the utter illusion democracy or meritocracy is. The uppermost classes have been trickters through all of history. What happened to this knowledge and the countercultural scene in hacking? Hint; it was psyopped in the early 90's by "libertarianism" and worship of bureaucracy to create a new class of cybernetic soldiers working for the oligarchy.
  - ilrwbwrkhv 3y ago
    I agree. The best young minds grinding leet code to get into Google is the biggest symptom of it.

stikit 3y ago

OpenAI is not a charity. Microsoft's investment is in OpenAI Global, LLC, a for-profit company. From https://openai.com/our-structure https://openai.com/our-structure - First, the for-profit subsidiary is fully controlled by the OpenAI Nonprofit. We enacted this by having the Nonprofit wholly own and control a manager entity (OpenAI GP LLC) that has the power to control and govern the for-profit subsidiary. -Second, because the board is still the board of a Nonprofit, each director must perform their fiduciary duties in furtherance of its mission—safe AGI that is broadly beneficial. While the for-profit subsidiary is permitted to make and distribute profit, it is subject to this mission. The Nonprofit’s principal beneficiary is humanity, not OpenAI investors. -Third, the board remains majority independent. Independent directors do not hold equity in OpenAI. Even OpenAI’s CEO, Sam Altman, does not hold equity directly. His only interest is indirectly through a Y Combinator investment fund that made a small investment in OpenAI before he was full-time. -Fourth, profit allocated to investors and employees, including Microsoft, is capped. All residual value created above and beyond the cap will be returned to the Nonprofit for the benefit of humanity. -Fifth, the board determines when we've attained AGI. Again, by AGI we mean a highly autonomous system that outperforms humans at most economically valuable work. Such a system is excluded from IP licenses and other commercial terms with Microsoft, which only apply to pre-AGI technology.

ezfe 3y ago
The board is the charity though, which is why the person you're replying to made the remark about MSFT employees being appointed to the board
- UrineSqueegee 3y ago
  A charity is a type of not-for-profit organisation however the main difference between a nonprofit and a charity is that a nonprofit doesn't need to reach a 'charitable status' whereas a charity, to qualify as a charity, needs to meet very specific or strict guidelines
  - ezfe 3y ago
    Yes, I misspoke - I meant nonprofit

voxic11 3y ago

Even if the IRS isn't a fan, what are they going to do about it? It seems like the main recourse they could pursue is they could force the OpenAI directors/Microsoft to pay an excise tax on any "excess benefit transactions". https://www.irs.gov/charities-non-profits/charitable-organizations/intermediate-sanctions-excess-benefit-transactions https://www.irs.gov/charities-non-profits/charitable-organiz...

mwattsun 3y ago

Microsoft doesn't have to send an employee to represent them on the board. They could ask Bill Gates.

deleted 3y ago
[deleted]
murakamiiq84 3y ago
Actually I think Bill would be a pretty good candidate. Smart, mature, good at first principles reasoning, deeply understands both the tech world and the nonprofit world, is a tech person who's not socially networked with the existing SF VCs, and (if the vague unsubstantiated rumors about Sam are correct) is one of the few people left with enough social cachet to knock Sam down a peg or two.
- lucubratory 3y ago
  Larry Summers, Bill Gates, if they keep on like that they can fill the board with all of Epstein's "associates".

pc86 3y ago

Others have pointed out several reasons this isn't actually a problem (and that the premise itself is incorrect since "OpenAI" is not a charity), but one thing not mentioned: even if the MS-appointed board member is a MS employee, yes they will have a fiduciary duty to the organizations under the purview of the board, but unless they are also a board member of Microsoft (extraordinarily unlikely) they have no such fiduciary duty to Microsoft itself. So in the also unlikely scenario that there is a vote that conflicts with their Microsoft duties, and in the even more unlikely scenario that they don't abstain due to that conflict, they have a legal responsibility to err on the side of OpenAI and no legal responsibility to Microsoft. Seems like a pretty easy decision to make - and abstaining is the easiest unless it's a contentious 4-4 vote and there's pressure for them to choose a side. But all that seems a lot more like an episode of Succession and less like real life to be honest.

throwoutway 3y ago
It's still a conflict of interest. One that they should avoid. Microsoft COULD appoint someone who they like and shares their values, that is not a MSFT employee. That would be a preferred approach but one that I doubt a megacorp would take
- ghaff 3y ago
  Both profit and non-profit boards have members that have potential conflicts of interest all the time. So long as it’s not too egregious no one cares, especially not the IRS.
dragonwriter 3y ago
> and that the premise itself is incorrect since "OpenAI" is not a charity OpenAI is a 501c3 charity nonprofit, and the OpenAI board under discussion is the board of that charity nonprofit. OpenAI Global LLC is a for-profit subsidiary of a for-profit subsidiary of OpenAI, both of which are controlled, by their foundational agreements that gie them legal existence, by a different (AFAICT not for-profit but not legally a nonprofit) LLC subsidiary of OpenAI (OpenAI GP LLC.)
oatmeal1 3y ago

_b 3y ago

> There are obvious conflicts of interest here. There are almost always obvious conflicts of interest. In a normal startup, VCs have a legal responsibility to act in the interest of the common shares, but in practice, they overtly act in the interest of the preferred shares that their fund holds.

hyperhopper 3y ago
The more and more I see the way complex share structures are used, the more I think they should be outlawed

bradleybuda 3y ago

Major corporate boards are rife with "on paper" conflicts on interest - that's what happens when you want people with real management experience to sit on your board and act like responsible adults. This happens in every single industry and has nothing to do with tech or with OpenAI specifically. In practice, board bylaws and common sense mean that individuals recuse themselves as needed and don't do stupid shit.

iandanforth 3y ago
"In practice, board bylaws and common sense mean that individuals ... don't do stupid shit." Were you watching a different show than the rest of us?
- badloginagain 3y ago
  And we're seeing the result in real-time. Stupid shit doers have been replaced with hopefully-less-stupid-shit-doers. It's a real shame too, because this is a clear loss for the AI Alignment crowd. I'm on the fence about the whole alignment thing, but at least there is a strong moral compass in the field- especially compared to something like crypto.
  - deleted 3y ago
    [deleted]
  - alsetmusic 3y ago
    > at least there is a strong moral compass in the field Is this still true when the board gets overhauled after trying to uphold the moral compass.
    - saalweachter 3y ago
      And when the CEO's other thing is a cryptocurrency?
      - 3y ago

hackernewds 3y ago

Not to mention, the mission of the Board cannot be "build safe AGI" anymore. Perhaps something more consistent with expanding shareholder value and capitalism, as the events of this weekend has shown. Delivering profits and shareholder value is the sole and dominant force in capitalism. Remains to be seen whether that is consistent with humanity's survival

boh 3y ago

Whenever there's an obvious conflict, assume it's not enforced or difficult to litigate or has relatively irrelevant penalties. Experts/lawyers who have a material stake in getting this right have signed off on it. Many (if not most) people with enough status to be on the board of a fortune 500 company tend to also be on non-profit boards. We can go out on a limb and suppose the mission of the nonprofit is not their top priority, and yet they continue on unscathed.

hinkley 3y ago
Do you remember before Bill Gates got into disease prevention he thought that “charity work” could be done by giving away free Microsoft products? I don’t know who sat him down and explained to him how full of shit he was but they deserve a Nobel Peace Prize nomination. Just because someone says they agree with a mission doesn’t mean they have their heads screwed on straight. And my thesis is that the more power they have in the real world the worse the outcomes - because powerful people become progressively immune to feedback. This has been working swimmingly for me for decades, I don’t need humility in a new situation.
Xelynega 3y ago
> Experts/lawyers who have a material stake in getting this right have signed off on it. How does that work when we're talking about non-profit motives? The lawyers are paid by the companies benefitting from these conflicts, so how is it at all reassuring to hear that the people who benefit from the conflict signed off on it? > We can go out on a limb and suppose the mission of the nonprofit is not their top priority, and yet they continue on unscathed. That's the concern. They've just replaced people who "maybe" cared about the mission statement with people who you've correctly identified care more about profit growth than the nonprofit mission.

varelse 3y ago

[dead]

jklein11 3y ago

I'm a little bit confused, are you saying that the IRS would have some sort of beef with employees of Microsoft serving on the board of a 501(c)(3)?

zerohalo 3y ago

OpenAI's charter is dead. I expect future boards to amend it.

dragonwriter 3y ago
Its useful PR pretext for their regulatory advocacy, and subjective enough that if they are careful not to be too obvious about specifically pushing one company’s commercial interest, they can probably get away with it forever, so why would it be any deader than when Sam was CEO before and not substantively guided by it.
ric2b 3y ago
People keep saying this but is there any evidence that any of this was related to the charter?
- Xelynega 3y ago
  The only evidence I have is that the board members that were removed had less business connections than the ones that replaced them. The point of the board is to ensure the charter is being followed, when the biggest concern is "is our commercialization getting in the way of our charter" what else does it mean to replace "academics" with "businesspeople"?

augustulus 3y ago

how can they not remain a charity?

627467 3y ago

I don't get the drama with "conflict of interests"... Aren't board members generally (always?) in representation of major shareholders? Isn't it obvious that shareholders have interests that are likely to be in conflict with each other or even the own organization? Thats why board members are supposed to check each other, right?

Xelynega 3y ago
OpenAI is a non profit and the board members are not allowed to own shares in the for profit. That means the remaining conflicts are when the board has to make a decisions between growing the profit or furthering the mission statement. I wouldn't trust the new board appointed by investors to ever make the correct decision in these cases, and they already kicked out the "academic" board members with the power to stop them.

mattmcknight 3y ago

The non-profit could sell off its interest in the for-profit company and use the money for AGI research.