In the wake of the chaos that erupted around former CEO Sam Altman's sudden ouster from OpenAI Friday afternoon, investors seemed to come away with the general impression that Microsoft (MSFT) -) would come away as the real winner of the mess.
Before the bell opened Monday, Microsoft CEO Satya Nadella said that Altman and many of his colleagues would be joining Microsoft to head up a new AI project at Microsoft.
Nadella said that Microsoft — which has invested $13 billion in OpenAI, granting it a 49% stake — remains committed both to its partnership with OpenAI and to Altman.
Related: Elon Musk 'very worried' about the Sam Altman drama at OpenAI
Microsoft's stock hit a new 52-week high of $378.87 on the news of the company's procurement of Altman. The forward momentum of the stock coming out of the chaos at OpenAI pushed the company's market cap up to $2.8 trillion.
Wedbush analyst Dan Ives called Microsoft's move the "poker move for the ages," saying that Microsoft is now in a "stronger AI position than before."
Deepwater's Gene Munster agreed, saying that Microsoft bringing Altman to its side was a huge "win" for the company.
"Congratulations to Satya for pulling a coup out of OpenAI's board's coup," he said.
But Matthew Prince, the co-founder and CEO of Cloudflare, doesn't think Microsoft comes out of this quite as strong as Munster and Ives believe.
Before the ouster and everything that followed, Prince wrote in a post on X, Microsoft had invested around $11 billion in OpenAI, capturing the bulk of the company's upside while remaining insulated enough to relegate the responsibility of hallucinations and other technical problems to OpenAI.
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While the company is better off now with some legitimate plans ahead for Altman, Prince contended that Microsoft is far worse off than it was before the ouster.
Hiring OpenAI team members "doesn't get them much they didn't have before, and it comes with a ton of new reputational risks," Prince said. Such a move would also carry with it enormous onboarding costs.
The responsibility of hallucinations and poor model execution, Prince said, will now fall onto Microsoft's shoulders.
Further, Prince doesn't think that OpenAI leadership folks would be inclined to stay for very long at Microsoft — the culture of a trillion-dollar company is not likely to give them the kind of independence these innovators crave (and had at OpenAI).
Prince doesn't see many ways for things to improve for Microsoft. He said that there were no clear winners.
Related: OpenAI CEO Sam Altman says that ChatGPT is not the way to superintelligence
"Sometimes owning a call option on an asset is better for multiple reasons than owning the asset itself," he said. "Last week Microsoft roughly owned a call option on OpenAI. Today, at best, they own some fraction of the asset itself."
The drama at OpenAI is far from settled; nearly all of the company's 770 employees have signed onto a letter demanding the resignation of the board and the reinstatement of Altman.
Three of the four board members have remained silent since the ouster began. Co-founder and chief scientist Ilya Sutskever, who is believed to have been instrumental in the move, has since said that he deeply regrets his "participation in the board's actions."
"I never intended to harm OpenAI. I love everything we've built together and I will do everything I can to reunite the company."
Nadella said Monday night that he was "open to both" Altman coming to Microsoft or staying at OpenAI.
“We obviously want Sam and Greg to have a fantastic home if they’re not going to be at OpenAI,” he said in an interview with CNBC. He remains committed both to OpenAI and to Altman "irrespective of what configuration.”
The board's reason for ousting Altman in the first place remains unclear; OpenAI said in its Friday statement that Altman had not been "consistently candid in his communications with the board, hindering its ability to exercise its responsibilities."
Evidence of these allegations has yet to appear, and neither the board, nor its members, have chosen to further explain their reasoning.
Microsoft shares ticked down slightly in pre-market trading.
Contact Ian with tips via email, ian.krietzberg@thearenagroup.net, or Signal 732-804-1223.
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