zlacker

The board of the non-profit (one that fired Sam) has no fiduciary duty to those investors, I believe. Microsoft invested in the for-profit Openai, which is owned by the non-profit. The other ones I don't know.

The board has no responsibility to Microsoft whatsoever regarding this. Sam Altman structured it this way himself. Not to say that the board didn't screw up.

>>MVisse+(OP)
That Microsoft agreed to such a deal is negligence of the highest order.

>>jnwats+U5
It might have been the only deal on the table. Perhaps they thought the risk was worth it - good processes don't always lead to good outcomes. Perhaps they felt that the rights they gained to the GPT models was worth it even if they don't get direct influence over OpenAI.

Between Bing, o365, etc. etc. etc. it's possibly they could recoup all of the value of their investment and more. At the very least it is a significant minimization of the downside.

>>MVisse+(OP)
You can do everything by the rules, and still do the wrong thing

>>mdekke+dg
Wrong by what metric? What if they believe the only way to fulfill their duty to the charter is for open ai to die? Why would it be wrong? Is it worse that it living to be the antithesis of itself? Just so the investors can have a little more honey?

>>MVisse+(OP)
They don't have any duty as far as governing the non-profit, but as majority shareholder of the for-profit subsidiary, the non-profit would still have a fiduciary duty to the subsidiary's minority shareholders.

>>MVisse+(OP)
While this may be technically true, the reality is that when you take $10 billion from a company there are strings attached. Consultation on a decision of this magnitude is one of those strings. You can choose to push ahead anyway after this is done but dropping the news on them 1 minute before you pull the trigger is unacceptable and MSFT will go for the throat here. You can't be seen to be a company that can be treated like this at MSFT level when you have invested this much money in any org.

>>TapWat+bk
Once you take in 10 billions then it’s pretty much the opposite, legality is the only things that matter.

>>hcks+al
Did they take a wire transfer for $10bn in cash, now sitting in their bank account? Or did they get a promise of various funding over N years, subject to milestones, conditions, in a variety of media including cash, Azure credits, loan lines etc.

I'd imagine the latter, and that it can be easily yanked away.

>>hcks+al
Depends what you mean. Legally they might be in the clear but guarantee when you fuck around with billions of other people's money, it gets more complicated that that.

>>rich_s+Yl
You mean the latter, but yeah. Financing like that is doled out based on a number of things; it would be wildly irresponsible to do otherwise for reasons exactly like this.

>>hcks+al
No, that's not it; relationships play gigantic roles in large deals.

Besides, even if you had an outstanding contract for $10bn, a judge would not pull a "well technically, you did say <X> even though that's absurd, so they get all the money and you get nothing."

>>WendyT+Lr
Fixed, thanks!

>>jnwats+U5
We have no idea what the terms of the deal are. It's probably "up to" $20 billion.

>>TapWat+bk
There are lots of other people and companies with $10 billion though. Why does it have to be Microsoft? Even after this circus, Open AI could still probably raise a ton of money from new entities if they wanted to. Maybe that is the point of this.

>>jnwats+U5
They put out a statement saying they have what they need. I don't see how Microsoft loses here. Either they get altman back at openai and get rid of the ethics crowd and make bank, or they find his new startup without the move slow crowd and make bank. No matter what they win.

>>sangre+yi
Duties to not dilute them or specifically target them, but majority can absolutely make decisions about executives even if those decisions are perceived as harmful.

>>MVisse+(OP)
Totally true. One can even argue they are forbidden to discuss this with MS. They would be mixing up the interests of the non-profit and its for-profit subsidiary. Legally, it’s only a change of control in the majority shareholder of a company where MS has invested in. They dont have a say, and pressuring them could be higly illegal.

>>jnwats+U5
As I understand it, they got all the model details and most of their investment was actually cloud credits on Azure. So technically they can cancel those going forward if they want to and deal with whatever legal ramifications exist. All of GPT4 (and other models) for probably $1-2b may not actually be a bad deal for them even if that's all they get.

>>MVisse+(OP)
how can a non-profit own a for-profit?

honest question

>>alickz+731
I'd say easily, especially outside the US. Check out Germany for example: - Bertelsmann Foundation, owns or is the majority shareholder of Bertelsmann - Robert Bosch Foundation, owns or is the majority shareholder of Bosch - Alfred Krupp von Bohlen and Halbach Foundation, owns or is the majority shareholder of Krupp - Else Kröner Fresenius Foundation, owns or is the majority shareholder of Fresenius - Zeppelin Foundation (yes, those Zeppelins...) owns or is the majority shareholder of ZF Friedrichshafen - Carl Zeiss Foundation, owns or is the majority shareholder of Carl Zeiss and Schott - Diehl Foundation, owns or is the majority shareholder of Diehl Aerospace

And a bunch more. A lot of you will never have heard of them, but all of them are multi billion dollar behemoths with thousands of subsidiaries, employees, significant research and investment arms. And they love the fact that barely anyone knows them outside Germany.

>>alickz+731
Easy, they own shares. For example, the nonprofit Mormon church owns 47 billion in equity in private companies including Amazon, Exxon, Tesla, and Nvidia[1].

Nothing stopping a non-profit from owning all the shares in a for-profit.

[1] https://finance.yahoo.com/news/top-10-holdings-mormon-church...