OpenAI investors are preparing a lawsuit against the board

OpenAI investors are preparing a lawsuit against the board

The day before, it was revealed that more than 90% of the OpenAI startup’s employees had signed an open letter to the board demanding his resignation and threatening to quit and work at Microsoft after two of the company’s founders. OpenAI investors are considering filing a lawsuit against the board, a confrontation that forced the CEO to leave the company.

    Image source: OpenAI

Image source: OpenAI

Let us remember that it was the board that insisted on the resignation of Sam Altman, who was at the origins of OpenAI and led the company until last Friday evening. CEO Greg Brockman showed solidarity with him and not only left the OpenAI board, but also joined Altman as a Microsoft employee on Monday morning.

What made this situation even more fascinating was the remorse of Ilya Sutskever, who sits on the board and, until the end of last week, mainly coordinated all the sudden changes at OpenAI. It was Sutzkever who, according to eyewitnesses, announced his resignation to former CEO Sam Altman, but on Monday evening Sutskever’s signature was on an open letter to the OpenAI board calling for members of that board to resign. Adding fuel to the fire were rumors that even after his resignation, the collapse of negotiations and his move to Microsoft, Sam Altman was hoping to return to the company he helped found.

agency on Tuesday morning Reuters began with a message about the intentions of some OpenAI investors to sue the company’s board, whose actions not only led to the resignation of CEO Sam Altman, but also posed the risk of a mass exodus of employees. Potentially affected investors are now consulting with attorneys to assess the prospects for this lawsuit. According to the authors of the initiative, the scandal surrounding one of the most famous startups in the field of artificial intelligence could cost investors hundreds of millions of dollars.

As you know, OpenAI’s ownership structure is not entirely typical of companies in the industry. The non-profit parent company OpenAI has significant powers over corporate governance, and the capital of the commercial subsidiary is 49% owned by Microsoft Corporation, which has invested $ 20 billion in this company. Other investors and employees of OpenAI itself control 49% of the capital of the company’s commercial structure, and the remaining 2% belongs to the parent non-profit structure. Such a plan gives the company’s employees serious opportunities to put pressure on OpenAI’s board, but venture investors who have invested in the company’s capital do not have much influence. OpenAI initially operated as a non-profit organization, but established a commercial subsidiary structure in 2019 just to attract capital for its development. At the same time, the company’s board members only bear limited responsibility for personnel decisions made, as external experts explain. From this perspective, it will be difficult for OpenAI investors to prevail in a potential lawsuit.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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