Sam Is Back

Hi, it’s Josh in New York. OpenAI’s governance is being overhauled before our very eyes, and the new board will have a clear deficiency to f [View in browser]( [Bloomberg]( Hi, it’s Josh in New York. OpenAI’s governance is being overhauled before our very eyes, and the new board will have a clear deficiency to fix. First up... Three things you need to know today: • Sam Altman is returning [to the helm of the ChatGPT maker]( • Sonos will soon sell [$400 headphones]( • Epic Games called Android a “[fake open platform](” Back to business OpenAI's leadership team, helped by a nudge from Microsoft Corp., finally restored co-founder Sam Altman to the chief executive officer post late on Tuesday. A new board is now being assembled, with the starting pieces including former US Treasury Secretary Larry Summers and former Salesforce Inc. CEO Bret Taylor, figures with more traditional business backgrounds than the departing members. The exact board composition is still being worked out, but whatever happens is unlikely to put an end to the debate that has been swirling around the company since it descended into chaos a little less than a week ago: What does a responsibly-run artificial intelligence organization look like? OpenAI has always been a weird institution, a result of its founders’ conviction that AI is different from anything else Silicon Valley had ever built. This led them to eschew the kind of venture-backed startup model that new tech companies adopt for building a messaging app or [disrupting the laundry industry](. The organization started as a nonprofit in 2015, then added a for-profit subsidiary several years later, so it could raise the enormous sums of money it’d need to actually operate the technology that underpins generative AI products like ChatGPT and Dall-E. it left an untraditional board in place to keep watch over the commercial arm. It’s still unclear what exactly led to Altman’s Friday firing — part of the agreement to reinstate Altman is an internal investigation into his conduct. But there was obvious tension between the commercial ambitions of OpenAI and Microsoft, its main investor, and the board members worried about the downsides of pushing AI development too fast. The blowback to Altman’s firing may have undermined the idea of building such caution into the structure of the company. For those who are unreceptive to arguments that AI is dangerous and should be developed slowly, a major lesson here is that OpenAI’s guardrails were its main problem all along.  The drama has led to a round of schadenfreude from techno-capitalists who are sick of hearing people who’ve never made a billion dollars tell them how to build things. Vinod Khosla, who made his first billion before investing in OpenAI, wrote in The Information on Nov. 20 that the non-businesspeople on the company’s board held religious, anti-tech beliefs, along with a “[false sense of understanding]( of the complex process of entrepreneurial innovation.” Another OpenAI investor, who asked not to be identified because they weren’t authorized to speak publicly on the topic, said the company’s governance structure had been a ticking time bomb and that Altman’s firing would lead to an overdue reassessment. Microsoft, while it didn’t have the formal power to stop the board from firing Altman, demonstrated the kind of soft power that comes from providing billions of dollars in capital and controlling the computing resources that OpenAI needs to operate. CEO Satya Nadella offered to hire Altman if he wasn’t reinstated — making it clear that the startup’s leader would have access to Microsoft’s vast resources to [pursue his vision one way or another](. As OpenAI’s board appears to take on a more traditional composition, its structure becomes less of a wildcard for Microsoft. There’s plenty of reason to be queasy about having an enormous for-profit company control the development of a technology that tends to freak out even those who are building it. But any alternative path is murky at best. Calls for public-sector alternatives have yet to result in much momentum, and efforts to regulate AI are moving more slowly than commercial efforts to develop it. (China may be the lone exception, as it’s already laid out a set of stipulations and required approvals.) Anthropic Pbc, a major OpenAI rival, has set up a so-called [long-term benefit trust]( that is supposed to serve a restraining function on its operations similar to OpenAI’s board. But the company is building the same kind of computing-hungry services as OpenAI and has [signed multibillion-dollar investment deals]( with Amazon.com Inc. and Alphabet Inc.’s Google. If there comes a time when people within Anthropic see a need to tap the brakes, they could run up against its significant financial incentive to push forward. Over the last five days, everything in Silicon Valley ground to a halt, as everyone waited to see how one of the strangest episodes in years would play out. Things now seem to be getting back on track. AI will speed ahead, with no consensus on whether the path it’s on is the right one. —[Joshua Brustein](mailto:jbrustein@bloomberg.net), with Lizette Chapman The big story Elon Musk’s X is failing to stop the surge of misinformation surrounding Israel and Gaza. The Community Notes system is [too slow and inconsistent]( to curb the spread of misinformation, according to a Bloomberg analysis. One to watch [Watch the Bloomberg Technology analysis]( of OpenAI and Microsoft. Get fully charged Binance agreed to pay billions in fines to [end its US legal woes](. China conditionally approved Broadcom’s $61 billion takeover of the software maker VMware, [the last hurdle for the deal](. Ford is reducing hiring and capacity plans at a battery plant in Michigan due to [weaker demand for electric vehicles](. Programming note: We’ll be taking Thursday off for the US holiday. See you Friday! More from Bloomberg Get Bloomberg Tech weeklies in your inbox: - [Cyber Bulletin]( for coverage of the shadow world of hackers and cyber-espionage - [Game On]( for reporting on the video game business - [Power On]( for Apple scoops, consumer tech news and more - [Screentime]( for a front-row seat to the collision of Hollywood and Silicon Valley - [Soundbite]( for reporting on podcasting, the music industry and audio trends - [Q&AI]( for answers to all your questions about AI Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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