Sam Altman, OpenAI, and the Importance of Corporate Governance
From Laurence Troutman, Prairie View A&M
Abstract
At about noon on November 17, 2023 CEO Sam Altman was fired by the three independent directors of OpenAI. The chaos of this event provokes “new questions about the people and companies behind the A.I. revolution. If the world’s premier A.I. start-up can so easily plunge into crisis over backbiting behavior and slippery ideas of wrongdoing, can it be trusted to advance a technology that may have untold effects on billions of people?”
Within the past year or so, artificial intelligence (AI)-enabled ChatGPT has proven to be “the fastest growing consumer application in history, having reportedly reached 100 million active users within two months of its public launch.” While these developments in AI raise many novel issues of law and policy that need to be addressed by policy makers and courts, it appears the importance to society cannot be overstated. Within the first three months of 2023, “More than 1,000 technology leaders and researchers, including Elon Musk, have urged artificial intelligence labs to pause development of the most advanced systems, warning in an open letter that A.I. tools present ‘profound risks to society and humanity.”’ According to The National Artificial Intelligence Research Resource Task Force (NAIRR), “New AI and AI-driven discoveries and capabilities hold the potential to drive practical solutions to address critical global challenges such as food production, climate change, poverty, and cancer. We… cannot afford to miss out on seizing the opportunity for leveraging AI to serve the public good.”
With altruistic aspirations, OpenAI states that “We are governed by a nonprofit and our unique capped-profit model drives our commitment to safety. This means that as AI becomes more powerful, we can redistribute profits from our work to maximize the social and economic benefits of AI technology.” Against this backdrop of what Bill Gates has described as “the most revolutionary technology he has seen in decades, on par with computers, cell phones, and the internet,” is the story of a corporate governance crisis that had the potential to destroy one of the most important technological engines of our time. In terms of societal impact, a compelling argument can be made that OpenAI requires the most experienced and talented corporate governance of any U.S. corporation, public or non-profit. This is the subject of this paper, how the board of directors at OpenAI terminated the employment contract of CEO Sam Altman, threatening the likelihood of hundreds of highly-skilled employees walking out the door, thus disrupting $billions in value and critical knowledge of this important technology. Hopefully, corporate directors of both for-profit companies, non-profits, venture capitalists, technologists, and government regulators can learn from this near disastrous example.
This paper proceeds in five parts. First, is a discussion about the importance of artificial intelligence. Second, a look at OpenAI is presented: its history; mission; relationship with Microsoft; and unique corporate structure. Third, is an examination of the OpenAI governance crisis culminating with the ouster of CEO Sam Altman on November 17, 2023. Fourth, the importance of professional, experienced, corporate governance is discussed.
darryll k. jones