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### The Turmoil at OpenAI: A Warning Sign for AI Self-Governance

If society wants to slow down the rollout of this potentially epochal technology, it will have to d…

It has been a tumultuous period at OpenAI, the renowned artificial intelligence (AI) firm best known for its highly successful ChatGPT service. The recent events saw the dismissal of Sam Altman, the CEO who played a pivotal role in the race towards artificial general intelligence (AGI). The nonprofit board at OpenAI, though the specifics remain somewhat unclear, took action due to concerns that Altman was not proceeding cautiously enough in light of the potential societal risks associated with AI.

However, the board’s decision seemed to have had unintended consequences. Almost immediately after Altman’s ousting, Microsoft, a close collaborator of OpenAI, swiftly recruited him to lead an internal AI research division. Moreover, faced with significant internal dissent from OpenAI’s employees, the board eventually backtracked and reinstated Altman as CEO, with some of the members who initially terminated him choosing to resign.

This unfolding narrative, both captivating and perplexing, is likely to be a topic of discussion in the tech industry for years to come. Beyond its implications within Silicon Valley, it serves as a valuable lesson for potential AI regulators: the notion of effective self-regulation, particularly through intricate corporate structures, may be illusory. The power struggle within OpenAI and the board’s struggle to maintain control over an increasingly commercially oriented entity underscore the reality that, if society aims to temper the rapid advancement of this potentially transformative technology, traditional top-down governmental regulation may be the only viable approach.

OpenAI stands out not only for its remarkable technological progress but also for its intricate and unconventional corporate framework, along with the unprecedented decisions stemming from it. Initially established in 2015 as a nonprofit research entity focused on developing AGI for the betterment of humanity, OpenAI faced financial constraints inherent in AI research, particularly AGI. Consequently, in 2019, it underwent a restructuring, introducing a for-profit subsidiary bound by legal obligations to uphold the nonprofit’s mission of creating safe AGI for the benefit of all. This unique setup, overseen by a nonprofit board, which in turn governed the for-profit subsidiary, deviated from the typical Silicon Valley model. Notably, the board included vocal critics of swift AI development, notably Helen Toner.

Over time, OpenAI’s core values began to evolve. By 2018, the company had shifted its focus away from openly sharing plans and capabilities, with a clear pivot towards building general-purpose AI by 2021, aligning more with commercial interests rather than pure research objectives to advance digital intelligence.

In tandem with the establishment of its for-profit arm, OpenAI entered into a strategic alliance with Microsoft, involving a substantial investment from Microsoft in OpenAI, predominantly in the form of computation credits on Azure, Microsoft’s cloud platform. With Microsoft holding a reported 49 percent ownership stake in OpenAI and entitled to 75 percent of the company’s profits until its investment is recouped, OpenAI’s trajectory veered significantly towards commercialization, especially following Microsoft’s exclusive licensing of the GPT-3 technology in 2019. With both a for-profit subsidiary and a tech giant as a major stakeholder, OpenAI transitioned from a pure research organization to a more commercially driven entity.

The intricate corporate structure of OpenAI, resembling a Russian doll with alternating research and profit-driven entities, has inherent complexities. While nonprofit startups are not uncommon, the inherent tensions between divergent goals can lead to organizational discord. Once OpenAI embraced commercialization, even under the noble guise of researching safe AGI, the clash between research integrity and commercial imperatives became inevitable.

The internal rift within OpenAI, pitting proponents of swift AI deployment against those advocating for cautious progress, had been brewing beneath the surface long before Altman’s departure. This internal divide came to a head in 2020 when a group of disenchanted employees, led by Dario Amodei, departed to establish Anthropic, an AGI research firm embodying the prudent approach they felt OpenAI had forsaken. This schism foreshadowed another internal clash at OpenAI in 2022 surrounding the release of ChatGPT, which alienated a faction of employees deeming the decision premature and reckless.

The concerns of the cautious faction, including OpenAI’s chief scientist Ilya Sutskever, centered on the fear that commercial imperatives and the pursuit of profit would overshadow OpenAI’s original mission of prudent research. The looming influence of Microsoft, known for its aggressive market strategies and eagerness to embed AI across its ecosystem, further exacerbated the challenges faced by advocates of a measured approach within OpenAI.

Conversely, the proponents of rapid AI deployment, spearheaded by Sam Altman, championed the swift introduction of this groundbreaking technology to the public while advancing towards true AGI. Altman’s background as the former CEO of Y Combinator, an accelerator focused on expediting the emergence of disruptive tech firms, positioned him as a driving force behind the public launch of ChatGPT and OpenAI’s subsequent rapid productization efforts. Ironically, reports suggest that the swift release of ChatGPT was partly motivated by concerns that safety-oriented Anthropic was developing a competing chatbot, prompting Altman to expedite OpenAI’s product launch.

Altman’s evangelism for AI extended beyond OpenAI, with his external ventures seemingly contradicting the company’s original ethos of cautious research. In the period leading up to his dismissal, Altman was purportedly exploring funding opportunities for a new AI chip venture, a move that could accelerate AI development and incentivize the rapid introduction of new models.

The internal power struggle between proponents of rapid progress and advocates of caution culminated in Altman’s dismissal on Nov. 17. While the exact catalyst remains ambiguous, preceding his termination, the board received a letter from several OpenAI researchers highlighting an algorithmic breakthrough, Q*, that could hasten AGI development significantly. This newfound realization of OpenAI’s research advancements likely contributed to doubts regarding Altman’s transparency with the board, especially considering that a board member, Sutskever, was involved in the company’s research endeavors.

Prior to the letter, certain board members had already begun questioning OpenAI’s commitment to safety and prudent research, with key skeptic Helen Toner endorsing Anthropic’s approach over OpenAI’s. Lingering doubts about OpenAI’s responsible practices and the realization that AGI might be closer than anticipated fueled skepticism towards Altman’s leadership. The board’s decision to remove Altman was primarily driven by concerns over AI safety, as evidenced by their overtures to Amodei, CEO of Anthropic, for a potential merger and leadership role.

Ultimately, the board’s attempt to oust Altman had unintended repercussions. Altman garnered widespread support from Silicon Valley, and a significant majority of OpenAI’s employees signed a letter demanding his reinstatement and the board’s resignation. Notably, Sutskever, who reportedly played a role in Altman’s removal, also endorsed the letter, expressing regret for his involvement and pledging to facilitate the company’s reunification.

The board’s decision not only backfired in terms of organizational stability but also in the broader context of AI governance. If the primary objective was to uphold OpenAI’s commitment to cautious AI research, the events that ensued painted a different picture. Microsoft’s swift move to recruit Altman post his dismissal highlighted the risks associated with displacing an AI evangelist to a more permissive environment, potentially accelerating the deployment of foundational models. In a turn of events, the board reinstated Altman, leading to the resignation of key members who initially supported his termination. This sequence of events underscored the fragility of industry self-governance and raised doubts about the effectiveness of voluntary commitments towards responsible AI.

The OpenAI debacle, while currently impacting the company, its stakeholders, and the AI community, offers valuable insights for prospective regulators. The incident emphasizes that relying on AI companies to self-regulate, particularly in the face of systemic societal risks posed by AI, is not a viable strategy. The inherent pressures, whether scientific or financial, make it challenging for AI firms to balance innovation with responsible deployment, necessitating top-down regulatory interventions.

In the context of AI regulation, the current voluntary frameworks and guidelines in the United States, though a starting point, may not suffice. Concrete obligations, laws, oversight mechanisms, and enforcement protocols will be essential to ensure AI safety, security, and trust. Drawing parallels to the evolution of cybersecurity regulation, which transitioned from voluntary frameworks to mandatory requirements, the AI industry may similarly require stringent regulatory frameworks to align industry incentives with public interest.

The OpenAI saga serves as a cautionary tale, highlighting the inherent conflicts between commercial imperatives and responsible AI development. As the industry navigates these challenges, the incident underscores the imperative for robust regulatory frameworks to mitigate the risks associated with AI deployment. The lessons gleaned from OpenAI’s tumultuous journey underscore the necessity of proactive top-down regulation to safeguard against potential AI-related perils.

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Last modified: February 4, 2024
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