Full Disclosure:​

The Legal Issues of Sam Altman and Open AI​

By Jaysen Sutton​

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Hi Reader 👋🏽,
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OpenAI's decision to fire its CEO shocked the technology industry on Friday. Sam seemed shocked. So did his cofounder. So did Microsoft, which supposedly found out 1 minute before OpenAI announced the dismissal.

Why it matters:

OpenAI is the company behind ChatGPT, which brought artificial intelligence to the masses.

Sam has respect in the tech world. He dropped out of university to start his first company, which he sold for $43m. He later became the CEO of Y Combinator, the accelerator behind many of the most successful companies.

Given OpenAI's critical role in the future of artificial intelligence, there are questions right now over the make up and decision-making ability of its board.

The legal focus:

In large public companies like OpenAI, the executives who run the day to day operations of a company answer to its board of directors. In the UK, the board have legal duties to act in the best interests of a company.

In this case, the board's statement regarding its decision to fire Sam was unusually provocative:

Mr. Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI.​
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Advocates for Sam have referred to the relative inexperience of the board: Who made the decision? Was the dismissal just?

On the other hand, it might be that the board felt forced to take swift action under its duties, before Microsoft and the broader tech world decided to get involved.

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The story represents the challenges of operating like a startup with a desire to move quickly and break things, against the responsibilities of a board.

Notably, at the time of writing, the story is changing fast. Microsoft has made a statement that Sam will be leading its new AI team, while OpenAI has found a new CEO.

This is unprecedented: a reflection of the unique makeup of technology companies and the role social media plays in the spread of information.


Have any thoughts? I'd love to hear your perspective below!

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