The data does not show Microsoft needs to commit fraud to benefit in this scenario. The OpenAI board is doing it to themselves, with someone lucky and savvy putting a sheet out to catch the windfall.
If you don't want Microsoft to take everything, "stop hitting yourself."
> The data does not show Microsoft needs to commit fraud to benefit here.
So you are saying that, on “the data”, Microsoft would not be in a materially worse business position given the OpenAI chaos if the security of their rights to OpenAI models in the event of a breakdown in their existing relationship was perceived as insecure?
Because otherwise the chain of reasoning is:
The licensing is secure, because Nadella says so, and Nadella can be trusted because if he was lying it would be securities fraud, and Nadella wouldn't commit securities fraud even if it would benefit Microsoft’s and, therefore, his interests.
Yes, and this is a logical jump. Almost certainly -- I would be my own money on it -- any contract Microsoft would have signed would have contingencies around breach and force majeure that would either 1) directly license or assign OpenAI IP to them, or 2) put OpenAI IP in escrow as as a risk hedge against their partner's potential liquidation. In either case, Microsoft covers their investment risk and very likely gets access to OpenAI code (and, of course, as we've seen, the ability to freely offer to hire their talent).
To be frank, it's entirely possible that Sam could have been fired for agreeing to a contract like this without board approval because the existential risk OpenAI constantly faces dramatically increases the likelihood that OpenAI investors -- besides Microsoft -- would never be made whole in the case of an implosion. The "Adam D'Angelo spite" hypothesis is possible, too, but it seems far less likely that the board of such a valuable company -- no matter how inexperienced and feckless they might be -- would risk tanking the company on the personal vendetta of a single director.
Microsoft is not in a fight for its life, OpenAI definitely is at this point.
That alone translates into Microsoft doesn't need to commit fraud, all they need to do is sit back and watch the rest implode and come out winners. They don't even have to sue, all they need to do is do nothing and OpenAI is toast.
That press release from MS the other day is a bowshot, not a promise. 'Play ball or else' with the 'or else' bit conveniently left to the imagination of the recipient.
MSFT is up over 50% since investing $10B in OpenAI. That's a couple orders magnitude difference in market cap over the investment alone.
Satya does not sound like someone communicating from a position of strength - he's been repeatedly assuring his shareholders that no matter what happens, their AI plans moving forward are secure. They need stability, not chaos, because whatever clear lead it seems they have right now could be quickly be eclipsed in the coming months.
Committing securities fraud and accepting a fine would pale in comparison to the potential value erosion.
MSFT doesn't have the culture to continue development at the same rate. So even if it had everything - people, code, weights, office plants, all of it - it's still not going to be able to do much it in the future. GPT5 might keep the momentum going for a while, but that's going to be it.
MSFT actually is fighting for its life. GPT4 is an intriguingly useful curiosity, Later GPTs had the potential to be culturally, politically, financially and technically revolutionary.
That likely won't happen now. We'll get some kind of enshittified prohibitively expensive mediocrity instead.
And I repeat - MSFT is up over 50% since investing $10B in OpenAI. That happened this year. This is the most important thing on their plate.
Of the slate of $1-3T tech companies the question of "where can we go from here?"... this is where, and the winners will be the first $10T enterprises.
Not necessarily. There will be a period of uncertainty/instability that competitors can emerge and capitalize on. Say the whole crew comes along, it could still be several months and maybe all sorts of legal wrangling making things difficult. But more likely there will be splintering that will benefit Google, Anthropic, Meta, Apple, esp. if comp is there, and that could be catastrophic.
I read this whole situation as putting pressure on OpenAI to come to their senses and quick.
> I read this whole situation as putting pressure on OpenAI to come to their senses and quick.
That we are in violent agreement on, the board should negotiate to be allowed to flee indemnified for the fall-out of their action. But if they do not OpenAI is done for, Anthropic has already indicated they are not going to be there to pick up the pieces, and Google and Meta will try to poach as many employees as they can by being 'not Microsoft' (which has a fair chance of working).
So there is damage, but it isn't over yet and for the moment Microsoft looks as though they hold the most and the most valuable cards already. After all they already have 49%. Another 2% as a suing-for-peace pacifier and they're as good as kings.
Martha Stewart was clearly an unusual situation where they were trying to make an example to hit hard in the public discourse.
I don't think the average citizen will care so much. When it comes to white collar crime making some white lies to bolster shareholder confidence is not in the same orbit as the type of massive fraud for notable jail time cases over the last couple decades.
At worst it should be a moderate SEC fine, perhaps a shareholder lawsuit if things don't turn out favorable. And this is assuming a lot that has to go wrong.
I don't presume to know what is the appropriate punishment for something like this. I do know that this is a high profile case and those attract attention of regulators because there is the opportunity to make an example. And I also know that people in fact did go to jail for what in monetary terms were far smaller offenses. Nadella isn't that stupid. I don't like him because he's just like Gates but with a lot more polish but I would not bet against him in anything concerning legal affairs. MS has some of the best legal minds in the industry, in fact I'd rate them higher on legal than I do on technical acumen.
Again, they make an example because people are pissed off. Despite this saga making front page news, no one is going to care much about Satya making misleading claims about OpenAI IP ownership. The average person on the street will not lose their retirement fund from that revelation.
The links to politicians, lobby efforts, the US economy, etc, etc... means something really egregious has to happen for jail time to be an issue w/ high level white collar crime.
EDIT: Since I can't respond further to the chain - tons of people cared about Martha Stewart. They were sick of people in high society getting a slap on the wrist for things like this. It definitely was a cathartis... esp. from someone so unlikely.
Absolutely nobody was pissed off about Martha Stewart. And at least 700 people + a whole raft of well known investors are pissed off about the OpenAI situation, so if MS Execs commit securities fraud - a stretch to begin with - there will be a lot of support for such action.
I'm trying very hard not to let my personal feelings about Microsoft cloud my judgment and if anything happened to Microsoft I wouldn't shed a tear (and might even open a bottle of bitter lemon). I don't see them committing an own goal like that.
> Microsoft is not in a fight for its life, OpenAI definitely is at this point.
> That alone translates into Microsoft doesn't need to commit fraud
My prior that “the only possible benefit to securities fraud is in circumstances of imminent existential risk” is clearly weaker than yours. Also, if Microsoft's description of the licensing situation is misleading, the existential risk to OpenAI—which makes it more likely that someone else ends up with control of its assets—makes the risk to Microsoft greater, not less.
Based on Microsoft's presentations so far and the fact that OpenAI has protested none of them it appears to me that MS indeed has those rights and they undoubtedly have the capability.
Change of control is a very standard clause in Escrow arrangements and it may have been subtly worded specifically to ensure that control of the company remained friendly to Microsoft interests given that they did not have a board seat. That's pretty much the only way they should have accepted that construct. If they didn't they were dumb and you can say a lot about Microsoft (I know I have and they're a shit company in my opinion) but they know the legal world like few other tech companies.
If you already have riches, it’s a good way to lose them unless you’re really careful.
Musk is a poster child on this front.
Lying about a material fact in a way that would be trivial to prosecute you on, especially when you have a well funded adversary it impacts, and that would be more than happy to destroy you with such a lie, is a good way to lose riches.
This is more like Ukraine announcing Putin’s pending invasion in advance.
Where did I say it didn’t? That’s actually a rather bizarre tangent.
Ukraine and Russia seem quite applicable, since Mr. Nadella was basically making it clear that:
1) he knew the potential direction someone might take to harm the company he is in charge of, and
2) there were already plans/things in place to make their chances of success zero. Plans that the opponent knows about and can verify, and in Microsoft’s case they were a party to making.
It’s the ‘I see what you’re doing there’ notice.
You’d have to be pretty desperate to keep going after that kind of notice. Russia was, and it has cost them immensely. We’ll see how it plays out OpenAI wise.
If those things weren’t all provably true, then it would be a really dumb move to do as it just exposes him to tons of direct risk with no plausible gain, as the opponent would have zero compunction in hurting him with it - and tons of ability to do so.
