Stock price hits a new high, Microsoft "turns disaster into fortune", completely eliminates the future troubles of AI?

Although the power struggle within OpenAI is not yet over, Microsoft CEO Satya Nadella's recent actions have truly earned him the title of a master in managing market value.

Last Friday, the OpenAI board suddenly and unexpectedly fired CEO Sam Altman, and President Brockman resigned in protest.

After the crisis erupted, Microsoft was also caught off guard, and Nadella himself only learned of the news a few minutes before the dismissal statement was issued. After releasing a statement expressing continued cooperation with OpenAI, which was neither here nor there, Microsoft's market value evaporated nearly 2% last Friday, losing almost as much as JD.com.

Throughout the weekend, global investors were focused on how the power struggle within OpenAI would end, and Nadella's actions can be seen as a desperate attempt to turn the tide. He managed to bring Sam Altman and Greg Brockman under his wing just before the start of the US stock market's after-hours trading, preventing them from establishing their own separate entity or being poached by competitors such as Google.

Microsoft ultimately closed up 2% on Monday, completely recovering the losses caused by the power struggle and reaching a new all-time high. The stock price continued to rise after market close.

Reviewing the entire incident, Microsoft can definitely be said to have turned misfortune into fortune, and Nadella has demonstrated his exceptional ability to protect shareholder value.

Currently, 95% of OpenAI employees have already signed a joint letter threatening to join Microsoft, and Nadella has essentially acquired OpenAI at a minimal cost. As analyst Ben Thompson puts it, "There is still no risk of an antitrust lawsuit."

However, what is more important for Microsoft now is to completely eliminate any future troubles.

Uncertain future after the power struggle, Altman may still return, Microsoft is determined to "eliminate future troubles"

On Monday local time, in a media interview, Nadella stated that the crucial artificial intelligence research at OpenAI will continue, and the collaboration with Microsoft will also continue. OpenAI employees can choose to either stay in their current positions or join Microsoft, and he is "open to both options," emphasizing that Microsoft will provide the necessary conditions for "continuing independent innovation" to the new colleagues who are about to join.

However, his remarks in the interview also imply that Altman's ultimate whereabouts may still be unclear. If the board members who initiated the coup resign and the management structure of OpenAI is reorganized, it seems that Altman still has a chance to return.

Microsoft's intentions are already quite clear: either all OpenAI employees will be integrated into Microsoft, becoming an in-house AI department, or the governance structure will be reorganized to prevent similar incidents from happening in the future.But no matter what the outcome, Microsoft is the winner - considering that OpenAI still needs Microsoft's financial support and computing backbone to develop its technology, it is also a good thing for Altman to return to OpenAI under different organizational structures.

Major investors in OpenAI, including Microsoft, Tiger Global, Thrive Capital, and Sequoia, attempted to overturn the decision of the OpenAI board to reinstate Altman, but the negotiations ultimately failed.

Nadella emphasized in an interview on Monday:

"It is very clear that some changes must be made around management."

He added that Microsoft "will have a friendly dialogue with the OpenAI board on this matter."

In addition, Nadella also stated that Microsoft respects OpenAI's non-profit foundation and agrees with the belief in AI safety:

"We want to ensure that from day one, we not only deal with the benefits brought by technology, but also deal with the unintended consequences brought by technology, rather than waiting until things happen to deal with them."

The power struggle has also exposed Microsoft's weakness

Although the situation has been effectively controlled, it must be emphasized that the occurrence of this power struggle has highlighted the instability of the Microsoft-OpenAI relationship.

As the world's second-largest company by market value, Microsoft's investment of over $13 billion in OpenAI did not buy enough influence. For OpenAI, Microsoft does not have a seat on the board of directors, nor does it have control.

Although it continues to launch profitable products and services, OpenAI is still a non-profit organization in terms of its organizational structure, with three independent directors who have no affiliation with the company controlling a majority of the seats.

In a report on Sunday, New Street Research analysts wrote:

"As the board of directors of OpenAI controls both non-profit and for-profit entities, it controls the cooperation with Microsoft and therefore controls Microsoft's future."

Since adding additional investment in OpenAI in January of this year, Microsoft's market value has grown by nearly $1 trillion, far ahead of other tech giants. This tech giant, which missed the mobile transformation, has not fallen behind in emerging tech competition for the first time in over 20 years. According to Wall Street analysts' expectations, although revenue is approaching $300 billion, AI is expected to create significant growth opportunities, with Microsoft's future revenue expected to grow at an average annual rate of 14% over the next three years.

Microsoft needs a more stable management team at OpenAI, or it needs to absorb talent from OpenAI and cultivate its own in-house AI department. Nadella must let Microsoft's major customers know that the company's important code and competitive advantages will not be disrupted by Silicon Valley soap operas.

Reversal, reversal, and reversal again

The dramatic events surrounding the power struggle at OpenAI have reached a jaw-dropping level.

Yesterday, under immense pressure from investors and employees, the OpenAI board of directors made the bold move of appointing an external candidate as the new CEO. Negotiations for the return of former CEO Sam Altman and former President Greg Brockman, who were dismissed by the board, have completely broken down.

Meanwhile, Microsoft, OpenAI's largest investor, announced that Altman and Brockman will be joining their leadership team in the AI department.

But the story doesn't end there. Upon learning that their former leaders will not be returning, OpenAI employees have started writing a joint letter threatening to resign and join Microsoft if Sam Altman and Greg Brockman are not reinstated.

As of the time of writing, according to the latest figures compiled by X, a netizen, out of the 770+ employees at OpenAI, 734 have already signed the joint letter, which essentially means that OpenAI is on the verge of disbanding.

What's even more astonishing is that Ilya Sutskever, the chief scientist who was previously seen as the mastermind behind the "coup," has also signed the joint letter and expressed deep regret for his involvement, indicating that he has completely switched sides to support Altman.