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Is Microsoft’s Hiring of Sam Altman a Stroke of Genius or a Costly Blunder?


Nov 20, 2023

The high-tech industry has been in turmoil in recent days following the impeachment case of the CEO of OpenAI. The board of directors of the artificial intelligence company that created ChatGPT, unexpectedly decided to remove the person who became the face of the company in the world: the founder, Sam Altman. After two days of publications and reports about the nature of the conflict in the company (disagreements regarding the commercialization of new AI technologies) and the possibility that the decision will be overturned, another surprising development in the case came: Microsoft’s CEO, Satya Nadella, announced that he is attracting Altman to the technology giant.

According to the tweet published by Nadella on Twitter (X), Sam Altman and Greg Brockman (chairman and president of OpenAI who resigned from the company), will join Microsoft to lead a new advanced research team in the field of artificial intelligence. As part of his new role, Altman is expected to manage interfaces with Microsoft’s Israeli development center as well Meanwhile, according to reports, Emmett Shir, one of the founders of the streaming site Twitch, has been appointed as the interim CEO of OpenAI, until a permanent CEO is found.

The turmoil in OpenAI was immediately reflected in Microsoft’s stock. With the announcement of Altman’s ouster, the technology giant’s stock fell by nearly 1.7%. In the meantime, according to publications in Microsoft, they were careful to cancel the move in the artificial intelligence company in which it had invested more than 10 billion dollars. After Nadella’s tweet on Monday, Microsoft shares rose 1.5% in the opening trade.

Apparently, Nadella’s move is clear. If Altman were to establish a start-up that competes with OpenAI, without commercial limitations and at the same time was recruited by a company like Google or Amazon, which are Microsoft’s biggest competitors in the field – the technology giant would risk losing its leadership in the fields of artificial intelligence and the cloud. Altman has become a brand in his own right this year, and one that can attract many investors and employees (and even pull, see the extension in the box).

According to Nir Orgad, an overseas stock analyst in the consulting department at Bank Leumi, this is damage control. “Microsoft found itself in a situation where, after investing heavily in the company, the face of the company and the face of artificial intelligence finds itself outside,” he explains. “Nadella splits the bet , because he doesn’t know what will happen to OpenAI.” Orgad describes the future of OpenAI as a “cloud in the fog.” “When a CEO is removed by surprise, it signals instability and a problem of trust for customers.”

Sergey Vaschunok, a senior analyst at the Oppenheimer investment house, defines Microsoft as the biggest beneficiary of the ouster storm in OpenAI. “Altman is the living spirit today in artificial intelligence, both in the eyes of investors and in the eyes of professionals in the field. Microsoft realized that it had to have him work for it and not for a competitor.”

But Vaschunok also recognizes a considerable risk in Microsoft’s move: “If this management crisis continues and collapses the company, the one who lost most of the money is Microsoft. This could be a constitutional investment. Microsoft’s goal as a technology giant is to translate artificial intelligence into the money it can bring it in. It has no goal for it to be just a scientific study, so OpenAI will also have to be rearranged.” And Sanchuk refers to what has been described as the essence of the conflict in the artificial intelligence company – disagreements about the commercialization of the new technology in the field, when Altman wanted to speed up the commercialization.

By Editor

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