Investors consider suing OpenAI following Sam Altman’s dismissal, but Microsoft says he could return to the AI company

The big picture: The very messy situation at OpenAI could cost the company more than it bargained for. After firing popular CEO Sam Altman last week, a move that prompted several employees to leave, investors are now reportedly considering legal action against the board. Further complicating matters, Microsoft CEO Satya Nadella, Altman’s new boss, has stated that the incoming Redmond employee could return to OpenAI in some capacity.

To quickly recap, Altman was fired as CEO of the ChatGPT company on Friday. The decision came after a review by the board of directors, which said it no longer had confidence in Altman’s ability to lead OpenAI and stay “consistently candid in his communications with the board.” His departure led several OpenAI members, including co-founder Greg Brockman, to leave the company in protest.

Yesterday, Microsoft boss Nadella announced that both Altman and Brockman, together with other colleagues who left OpenAI, will be joining Microsoft to lead a new advanced AI research team.

We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners. We look forward to getting to know Emmett…

– Satya Nadella (@satyanadella) November 20, 2023

None of this is good for OpenAI, of course. According to a new report from Reuters, some investors are now considering legal recourse against the company’s board, though it’s not immediately clear if they will sue OpenAI.

OpenAI has led the generative AI revolution over the last 12 months, attracting investment that includes around $10 billion from Microsoft, which owns 49% of the firm. Other investors and employees control 49%, while the remaining 2% is owned by OpenAI’s nonprofit parent.

With more than 700 employees threatening to resign unless the company replaces the board, the startup’s sudden fall from grace and the threat of collapse has investors panicking.

Reuters notes that OpenAI is controlled by its nonprofit parent company, meaning venture capitalists don’t hold board seats or have voting power, as is usually the case. OpenAI’s structure means that it would be difficult for investors to sue, and even if it is possible, they would have a weak case.

On Monday, Nadella was asked whether Altman was actually joining Microsoft or returning to OpenAI. The CEO said he was “open to both options.”

“Look, that is for the OpenAI board and management and the employees to choose,” Nadella said. “We chose to explicitly partner with OpenAI and we want to continue to do so, and obviously, that depends on the people of OpenAI staying there or coming to Microsoft.” He told Bloomberg that “irrespective of where Sam is, he’s working with Microsoft.”

Nadella also dropped a hint that Altman could one day be considered for the CEO role at Microsoft. “Let’s just say it’s fantastic to have lots of capable people who can become CEOs of Microsoft,” Nadella said during Kara Swisher’s “On” podcast.