Posts Tagged ‘Satya Nadella’

Microsoft Considered Harmful

Monday, February 23rd, 2026

Microsoft has long had a reputation of an abusive company, all the way back to its origins, when Gary Kildall accused Bill Gates of stealing parts of CP/M for DOS. The list of lawsuits against Microsoft for anti-competitive or shady business business practices is so extensive it has its own Wikipedia article. But it’s latest moves to force both subscription models and AI into every nook and crevice of its software may be the final straws that break the Borg’s back, as longtime Windows users finally seem to be abandoning ship.

First up, this David Linthicum piece.

Last month, I met with a mid-sized law firm facing a common dilemma. Their Windows 10 laptops were nearing the end of support and needed to be replaced. Typically, this meant buying new hardware and software—predictable and straightforward. But this time, Microsoft suggested a different approach: move to Windows 365 Cloud PCs, a PC that operates with a monthly subscription and is accessible from any device, scalable, secure, and AI-enhanced. The catch? The shift from ownership to a subscription model and reduced local control led their IT team to question how “personal” these computers truly were.

Cloud subscriptions replace personal computing

The experience of this law firm encapsulates a major industry shift: Today, you don’t buy Windows, you rent access to it. Windows 365 Cloud PCs began as a business-only experiment at Microsoft but have grown into its central product and are now the primary road map, with local Windows installations becoming a mere stepping stone to cloud-based desktops. With tools like Windows 365 Boot, users can bypass the traditional local operating system altogether, landing directly into a personalized, cloud-streamed environment, even on third-party or bring-your-own devices.

Hardware no longer anchors the user’s experience; the familiar PC is now a portal into a metered utility controlled, updated, and managed by Microsoft. Windows 365 Switch blurs the line even further, allowing seamless migration between cloud and local environments. With each step, more user agency is surrendered in exchange for the convenience of a cloud-managed world.

The AI revolution and hardware

As if the cloud weren’t enough, artificial intelligence is muddying the waters. Microsoft is loud about a future built on AI PCs, touting Copilot integration, neural processing units (NPUs), and specialized hardware. But as Dell’s own product head recently admitted, customers aren’t flocking to buy these new devices for AI alone; the proposition is too abstract, and the day-to-day benefits too unclear. In reality, most significant leaps in AI are happening in the cloud, not on the desktop. Even Jeff Bezos framed the future simplistically: AI will appear everywhere, but it will live in the cloud.

Meanwhile, Microsoft is aggressively pushing its users to rely on its AI-powered tools and ecosystem, with access controlled through subscriptions. Gone is the idea of installing and running your own AI applications locally; instead, users are nudged to rent access to AI services, hosted and updated in Microsoft’s cloud. The notion of the self-managed PC is fast giving way to a persistent, subscription-based rental of power and capability, with AI primarily serving as another tool for vendor lock-in.

Hidden costs and loss of control

Businesses and individuals face new economic realities. The traditional model—investing in hardware for five years—is replaced by an ever-escalating treadmill. A basic Windows 365 Cloud PC costs about $41 a month for 8GB, excluding Office or AI add-ons. Vendors pitch this as a trade-off against the hidden costs and complexity of managing local computers in hybrid work. Before long, subscription fees will become just another line item in ballooning IT expenses.

Perhaps more concerning is the core loss of control. The local PC gave users the keys. They owned, updated, installed, and protected their own digital spaces. The new cloud-and-AI reality puts Microsoft in charge of software, identity, AI tools, and even privacy decisions. The old personal computer offered freedom; the new model is managed, metered, and routinely adjusted to fit Microsoft’s evolving business interests. Yes, security can benefit. Yes, patching and remote management are simplified for companies. But every user now sits one step further removed from the heart of their own computing experience.

That was linked by this piece, which was linked from Borepatch, who has further thoughts.

What this means is that you don’t own any Microsoft software. Sure, you may think that because you paid them money (most often when you bought your computer – some of that purchase price went to Microsoft in the form of a license fee for Windows). But you actually don’t own “your” copy of software. At all.

Rather, you have the right to run the software on your computer. That may not seem like a big difference, but it is. The license agreement (you know, the one you didn’t read before you clicked “I Agree”) allows Microsoft to change the terms of the agreement at any time, at their pleasure.

Microsoft has just done this in a big, big way. Key new stuff in Windows 11 is:

  • AI integrated with your operating system
  • Online presence is critical for lots of Windows now (e.g. AI)
  • Windows will nag you until you put all your data online (OneDrive) whether you want to or not.

    • The proper technical term for that first bullet point is that your Windows operating system is essentially now an “AI Agent” which if you are a regular reader you know is very, very bad security juju.

    Combine this enormous security hole with the requirement to essentially be online 100% of the time (bad security) and the liklihood that OneDrive will slurp all your data to some Internet black hole in a Microsoft data center, Windows is simply unsecurable.

    Yes, I know that is inflammatory, but there is simply no way that you can get assurance that your security is sane. I say that as someone who has spent decades inn Internet Security (and particularly in security assurance). Not to put too fine a point on it, but I don’t think that I could get decent assurance that things aren’t going “bump in the Net”. For most of the readers here, it’s not even worth trying.

    And that AI, Copilot, is not only widely loathed by users, but is creating brand spanking new security holes.

  • “We’ve been following Microsoft and all their massive missteps over the last several months. Most of it related to AI and pushing AI into consumer products and pushing it on to people who don’t want it.”
  • “There’s an error with Copilot. Apparently, it can can read your email. That’s great. And Copilot is sort of the bedrock of Windows 11. It’s very hard to get rid of Copilot. They want to put it in everything, including Notepad.”
  • “Copilot slows everything down. I would highly recommend you turn it off.” If you can figure out how. Kneon recommends Linux Mint if you want a Windows-like experience.
  • “Look, Microsoft is not secure. And just realize if you’re using it, especially for business, if you don’t want anybody to see it, you probably shouldn’t use their tools.”
  • “A work tab within Copilot chat had summarized email messages stored in a user’s draft and sent folders even when they had a sensitivity label on it and a data loss prevention policy configured to prevent unauthorized data sharing.” Sounds like Copilot is as indifferent to your privacy and security as Microsoft on the whole.
  • “I don’t know if you can hurt Xbox anymore, because Xbox is a dying brand, but the new boss, who comes from an AI background, promises not to flood it with soulless AI slop. This is Asha Sharma, formerly the head of Microsoft’s AI division, which is causing problems. Now she’s in charge of Xbox. She promises many more great games made by humans.”
  • Sharma blather about how Xbox will run across multiple platforms instead of a console snipped. “Are we seeing first signs that Xbox is dead and about to be consumed by Microsoft? I think that’s 100% what’s going to happen.”
  • “I think they’re going to basically AI themselves into the wood chipper. I think it’s very clear that that’s all they care about right now, if they’re putting the head of AI in charge of gaming and she’s talking cloud and AI and all that. Yeah, it’s over, man.”

    • Microsoft CEO Satya Nadella is facing some accusations of “Indian nepotism” for putting Sharma in charge of Xbox, especially since she has no background in gaming development. Of course, Microsoft has long been accused of abusing the H1-B visa system to bring over cheap workers. Indeed, this MSN India piece crows about it.

    According to official H-1B filings submitted to the US Department of Labor between 2012 and 2023, Microsoft filed over 50,000 H-1B visa applications, and approximately 70 to 80 percent of these applications were for Indian nationals. This makes Indians the largest group in Microsoft’s US-based technical talent pipeline. The data shows a consistent year-on-year trend where Indian engineers make up the majority of Microsoft’s skilled immigrant workforce.

    Snip.

    Multiple research estimates and workforce studies indicate that 26 to 30 percent of Microsoft’s global technical workforce is Indian or Indian-origin.

    Snip.

    Microsoft operates one of its biggest global R&D centres in Hyderabad, which works on products including Azure, Office, Windows, LinkedIn integration, AI/ML systems and cybersecurity. The India Development Center (IDC), established in 1998, is one of Microsoft’s oldest and largest development facilities outside Redmond. This drives significant recruitment of Indian engineers for advanced research and product development roles.

    Snip.

    A review of Microsoft’s global leadership roster shows notable Indian-origin executives including Satya Nadella (CEO), Rajesh Jha (EVP), Suresh Kumar (EVP), Anil Bhansali (VP Engineering), and dozens of corporate vice presidents and product heads. This demonstrates the substantial representation of Indian-origin professionals in high-level technical and management roles within the company.

    But Microsoft also has a Jeffrey Epstein problem. Do a search on founder and former CEO Bill Gates in the Epstein files and you get 2,616 results. Nor is he the only Epstein-connected person of interest high in the ranks of Microsoft. Financier and Democrat megadonor Reid Hoffman is still listed on the Microsoft board, despite being notoriously close to Epstein and showing up in the Epstein files 2,667 times. (Also on the board: Former Obama Commerce Department head Penny Pritzker, sister of Illinois Governor J.B. Pritzker and aunt to Epstein friend Tom Pritzker, whose name shows up 2,524 times in the Epstein files.)

    Even before Microsoft jumped on the AI bus (or, if you prefer, off the AI cliff), it was notorious for security holes in its software, and there’s precious little evidence that the AI age has made anything better. The latest “Patch Tuesday” featured fixes for no less than six Zero Day exploits.

    What all this amounts to: Anyone still on Windows should look to move to Linux if they have the technical chops to do so, or Apple if they don’t. Though Apple has dabbled with subscription services as well, they’re still overwhelmingly a hardware company that wants to sell you the latest shiny. And Apple has been dinged for its “lazy” approach to AI, which may turn put to be the smartest move after all. “Amazon, Microsoft, Meta Platforms, and Alphabet are projected to spend around $700 billion combined on capital expenditures in 2026, much of it on AI data centers and hardware — Apple plans just $14 billion.” That means they’re less likely to try and shove it into every damn thing. And I know my now-relatively-ancient MacBook Pro keeps working even when the Internet is down.

    If you’re still on Windows, now might be the time to get out while the getting is good…

    Hat tip to the title.

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    AI News Roundup For February 5, 2026

    Thursday, February 5th, 2026

    A bunch of AI-related news has popped up this week, so let’s do a roundup.

  • Some AI companies are complaining that TSMC is killing the AI boom by not expanding rapidly enough:

    Asianometry notes that TSMC’s caution at expanding is amply justified by the boom-and-bust nature of the semiconductor industry:

    • “I’m hearing many similar views in the Silicon Valley Borg that TSMC is the break or limiter on the AI boom, as if they’re the reason why we don’t have AGI yet. Because they didn’t and still don’t believe.”

    • “If we can ever say that a company that spent $41 billion on capital expenditure in 2025, with another $53 to $56 billion in 2026 planned, is sitting on its hands, doing nothing.”
    • “TSMC having 90% share of the AI chip market looks pretty unhealthy. That should go down and it will. Samsung seems to be doing well so far.”
    • “The cold, hard reality is that shortages are a fact of life in semiconductors, as are horrific gluts.”
    • “What we are flippantly labeling as TSMC we really mean is the AI supply chain. And that supply chain is as complicated as you can possibly imagine. Like an iceberg, it looks big enough on the surface of the water, but goes way far deeper underneath. TSMC has thousands of suppliers in two categories: Equipment like the famed ASML lithography tools and materials like photoresist, silicon wafers, acid etch gases and so on. These are not generalized tools and materials. They are not fungeible like AWS compute units.”
    • “And then there are the memory guys. You cannot ship an AI system without memory. DRAM and NAND. Nvidia’s AI chips use a special form of DRAM called high bandwidth memory, and they use quite a lot of it. The memory industry is just as consolidated as the logic industry, with the major players being Samsung, SK Hynix and Micron.”
    • “The chip guys are last to know when the party is getting started, but first they get batoned in the face when the police shut things down.”
    • He points out that semiconductor manufacturers have log supply chains. He uses a different metaphor (the beer distribution game, or a bullwhip), but back when I was working at Applied Materials, it was described as trains linked together with slinkys. First software takes off, then hardware gets yanked along, then the chip manufacturers get yanked, and then, finally, semiconductor equipment manufacturers get yanked into motion, and shortly after that happens, the bust hits the front of the train, and the trailing cars all crash into each other. It’s a regular boom/bust cycle.
    • “From 1961 to 2006, electronics consumption in the United States grew positively but with wild volatility swings between 0 to 20%. But for the semiconductor makers, that translates to swings anywhere from 20% to 40%. And for the equipment makers, it is amplified even more, plus or minus 60%. The whip hits particularly hard in the semiconductor industry because of the industry’s long lead times. It takes 4.5 months to fabricate and package a chip. It takes 18 months to 2 years to build a fab. Meaning from shovels down to producing chips, and it takes 12 to 18 months to produce and install something like an EUV machine into the fab. Another 6 months before that machine actually starts patterning wafers.”
    • “Long lead times mean having to make very long demand forecasts, which leads to extreme volatility swings during up and downturns even if those up or downturns are relatively small.” People forget that in 1998, during the time we now think of as the DotCom Boom, there was a small semiconductor downturn that had Applied Materials forcing employees to take unpaid leave.
    • “ASML just reported 2025 earnings, and we see the bullwhip in full effect. TSMC raised capital expenditure 35% but ASML announced €13.2 billion of net new bookings. Analysts had expected just €6.32 billion. This is because ASML collected orders not just from TSMC, but also Samsung, Intel and the memory guys. When it rains it pours, right? Again, this is why I fear that another AI foundry would not mean our compute shortage is solved, because ultimately, when those foundries start scaling their capacity, they all go to the same suppliers.”
    • He goes over how car manufacturers cancelled orders during Flu Manchu, and then scrambled when the economy took off afterwards. “TSMC was trying to discern between double booked orders and real demand, which is not an uncommon experience for them. Customers lie about their own demand all the time, or at least we can say that they are eternally optimistic. TSMC tried to respond in 2022. The Taiwanese giant poured $36 billion into capital expenditure. They went to their suppliers and pushed like no tomorrow.”
    • “It turned out those customers really were double booking orders and artificially inflating demand. When the macro environment turned in 2022, the automotive, smartphone, and PC chips that were so hot during the COVID era fell out of vogue and customers started cutting orders.”
    • “Meanwhile, deeper down in the supply chain, TSMC and the rest of the semiconductor industry were getting bullwhipped by COVID hangover. Utilization at TSMC’s multi-billion dollar N7 fabs crashed, Semi analysis wrote in April 2023. Now, Semi analysis data indicates that the 7nm utilization rates were below 70% in Q1. Furthermore, Q2 gets even worse with 7nm utilization rates falling to below 60%. This is primarily due to weakness in both smartphones and PCs, but there is a broader weakness in most segments. A fab’s break even utilization rates are about 60% to 70%. So those N7 Taichung fabs were taking financial losses potentially on the order of hundreds of millions, maybe even billions. The financial burdens of low utilization are another reason why I’m skeptical another AI foundry could have rushed into the AI chip fray to save the day.”
    • He says that Intel incurred losses during this period due to an unnecessary fab expansion, which is probably true, but that was a secondary factor next to their longer running problem of getting their process wrong.
    • “ChatGPT was released in November 2022, and that kicked off a massive increase in capex amongst the hyperscalers in particular, but it sure seems like TSMC didn’t buy the hype. That lack of increased investment earlier this decade is why there is a shortage today and is why TSMC has been a de facto break on the AI buildout/bubble.”
    • “I recall news in mid 2024 of TSMC struggling with CoWoS capacity bottlenecks and yield problems, including one design issue that caused cracks in the Nvidia chips packaging.” CoWoS is Chip on Wafer on Substrate, which involves fabbing an interposer as a substrate for faster connections between your processing chips and memory.
    • “I also recall news in late 2024 noting how the vendors in charge of making the server racks for Nvidia’s Blackwell servers struggled with overheating, liquid cooling leaks, software bugs, and connectivity issues. Such technical difficulties delayed server deployment until early to mid 2025, creating a weird situation for several months where TSMC was pumping out chips that just went into storage. So that gated things, because you don’t scale until you first fix the technical problems.”
    • Then there’s the power-scaling issue, which is a whole ‘nuther can of worms.

  • There’s a lot of talk about a SaaSpocalypse going on thanks to a new AI tool. (SaaS is “Software as a Service.” Instead of hosting your own payroll or sales-tracking or whatever servers, you hire a company that already has cloud software setup to do it and you just tie into that, which can considerably reduce startup costs. A whole lot of successful new tech companies over the last decade plus have been SaaS companies.)

    The software sector was jolted overnight with what analysts are calling a “SaaSpocalypse” — a sudden and severe selloff triggered by new artificial intelligence tools unveiled by US AI startup Anthropic. The episode has sharpened investor fears that AI is no longer merely helping software companies but may now begin replacing them.

    Anthropic has expanded its enterprise AI platform, Claude Cowork, by launching 11 new plugins aimed at automating a wide range of professional tasks. Claude Cowork is an agentic, no-code AI assistant built for corporate users, allowing companies to automate workflows without writing software. The new plugins are designed to handle tasks across legal, sales, marketing and data analysis functions. The most recent addition is Anthropic’s Claude Legal agent, which can perform routine legal work such as document and contract review, and compliance checks.

    Anthropic has said that the tool does not provide legal advice and that all AI-generated outputs must be reviewed by licensed attorneys. Even so, the breadth of automation signals a step change in how much white-collar work AI systems can now perform.

    Here are the current plugins for Claude Cowork:

    • Productivity — Manage tasks, calendars, daily workflows, and personal context
    • Enterprise search — Find information across your company’s tools and docs
    • Plugin Create/Customize — Create and customize new plugins from scratch
    • Sales — Research prospects, prep deals, and follow your sales process
    • Finance — Analyze financials, build models, and track key metrics
    • Data — Query, visualize, and interpret datasets
    • Legal — Review documents, flag risks, and track compliance
    • Marketing — Draft content, plan campaigns, and manage launches
    • Customer support — Triage issues, draft responses, and surface solutions
    • Product management — Write specs, prioritize roadmaps, and track progress
    • Biology research — Search literature, analyze results, and plan experiments

    A lot of those are already automated elsewhere, but I suspect a lot accountants and paralegals just felt a goose strut across their grave. On the other hand, who is really going to turn over, say, Accounts Payable to an AI? One glitch, and your entire bank account is drained…

    If it works (a big if, give so many AIs are prone to hallucinations), this is potentially good news for Anthropic and the companies using their tools, and bad for SaaS companies and the employees currently doing those jobs.

    I note there’s no plugin for technical writing…yet.

  • Google/Alphabet just reported $400 billion in earnings in 2025. CEO Sundar Pichai:

    And Google Cloud ended 2025 at an annual run rate of over $70 billion, representing a wide breadth of customers, driven by demand for AI products.

    We’re seeing our AI investments and infrastructure drive revenue and growth across the board. To meet customer demand and capitalize on the growing opportunities we have ahead of us, our 2026 CapEx investments are anticipated to be in the range of $175 to $185 billion.”

  • Remember how Nvidia was going to invest $100 billion in OpenAI? Yeah, not so much.

    In September 2025, Nvidia and OpenAI announced a letter of intent for Nvidia to invest up to $100 billion in OpenAI’s AI infrastructure. At the time, the companies said they expected to finalize details “in the coming weeks.” Five months later, no deal has closed, Nvidia’s CEO now says the $100 billion figure was “never a commitment,” and Reuters reports that OpenAI has been quietly seeking alternatives to Nvidia chips since last year.

    Reuters also wrote that OpenAI is unsatisfied with the speed of some Nvidia chips for inference tasks, citing eight sources familiar with the matter. Inference is the process by which a trained AI model generates responses to user queries. According to the report, the issue became apparent in OpenAI’s Codex, an AI code-generation tool. OpenAI staff reportedly attributed some of Codex’s performance limitations to Nvidia’s GPU-based hardware.

    After the Reuters story published and Nvidia’s stock price took a dive, Nvidia and OpenAI have tried to smooth things over publicly. OpenAI CEO Sam Altman posted on X: “We love working with NVIDIA and they make the best AI chips in the world. We hope to be a gigantic customer for a very long time. I don’t get where all this insanity is coming from.”

  • You know who’s not winning the AI war? Microsoft.

    Microsoft’s Copilot chatbot has become central to its artificial-intelligence strategy as the company’s close partnership with OpenAI diminishes. But the effort to build it up as a ChatGPT alternative has been tough going.

    Remember, Copilot is the AI that wants to take pictures of your desktop every few seconds. Golly, can’t imagine why it’s unpopular..

    Confusing brand positioning and interoperability problems have frustrated users, current and former employees who have worked on Microsoft’s AI products said.

    Interoperability problems? With a Microsoft product?

    Only a small proportion of subscribers to Microsoft’s enterprise suite use Copilot, and the percentage who favor it over Google’s Gemini or other tools has decreased in recent months, according to data reviewed by the Journal.

    The stakes are high for Microsoft because Copilot is core to a push by Chief Executive Satya Nadella to transform Microsoft into an AI-first company, much as he transformed it into a cloud-first company around a decade ago. Copilot is one of Nadella’s top priorities, current and former executives said.

    Microsoft shares tumbled after its earnings report last week sparked investor concern that growth in its most important unit, the Azure cloud-computing business, is slowing, and that its AI business is reliant on OpenAI while Copilot remains unproven. Shares fell nearly 3% Tuesday amid a slide in software stocks prompted by fresh concerns that AI tools will make enterprise subscriptions less necessary.

    For other AI companies, we merely suspect they’re evil. For Microsoft (and Google), we already know they’re evil…

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    Explaining The Sam Altman/OpenAI Thing

    Tuesday, December 5th, 2023

    Hey, remember that whole “Sam Altman fired as CEO/reinstated as CEO of OpenAI” thing a couple of weeks ago? Here’s the archive story.

    Sam Altman was reinstated late Tuesday as OpenAI’s chief executive, successfully reversing his ouster by the company’s board last week after a campaign waged by his allies, employees and investors, the company said.

    The board would be remade without several members who had opposed Mr. Altman.

    “We have reached an agreement in principle for Sam to return to OpenAI as CEO with a new initial board of Bret Taylor (Chair), Larry Summers, and Adam D’Angelo,” OpenAI said in a post to X, formerly known as Twitter. “We are collaborating to figure out the details. Thank you so much for your patience through this.”

    The return of Mr. Altmanand the potential remaking of the board, capped a frenetic five days that upended OpenAI, the maker of the ChatGPT chatbot and one of the world’s highest-profile artificial intelligence companies.

    “i love openai, and everything i’ve done over the past few days has been in service of keeping this team and its mission together,” Mr. Altman said in a post to X. “with the new board and w satya’s support, i’m looking forward to returning to openai, and building on our strong partnership with msft.”

    OpenAI’s board surprised Mr. Altman and the company’s employees on Friday afternoon when it told him he was being pushed out. Greg Brockman, the company’s president who co-founded the company with Mr. Altman and others, resigned in protest.

    The ouster kicked off efforts by Mr. Altman, 38, his allies in the tech industry and OpenAI’s employees to force the company’s board to bring him back. On Sunday evening, after a weekend of negotiations, the board said it was going to stick with its decision.

    But in a head-spinning development just hours later, Microsoft, OpenAI’s largest investor, said that Mr. Altman, Mr. Brockman and others would be joining the company to start a new advanced artificial intelligence lab.

    Nearly all of OpenAI’s more than 700 employees signed a letter telling the board they would walk out and follow Mr. Altman to Microsoft if he wasn’t reinstated, throwing the future of the start-up into jeopardy.

    Four board members — Ilya Sutskever, an OpenAI founder; Adam D’Angelo, the chief executive of Quora; Helen Toner, a director of strategy at Georgetown’s Center for Security and Emerging Technology; and Tasha McCauley, an entrepreneur and computer scientist — had initially decided to push Mr. Altman out.

    Well, here’s Patrick Boyle to provide some context:

    A few takeaways:

  • There are two OpenAIs: “The non-profit OpenAI, Inc. registered in Delaware, and its for-profit subsidiary OpenAI Global, LLC.”
  • Musk was an early, and big, investor in the non-profit. “The founders pledged over one billion dollars to the venture, but actually only contributed around $130 million dollars- the majority of which came from Elon Musk.”
  • When he felt OpenAI was falling behind in 2018, he wanted to take over OpenAI himself. When the board rejected that, he resigned and took future pledged money with him, which blew a huge hole in their budget. (Whatever you think of Musk, I don’t think not being busy enough is his problem.)
  • Then came the for-profit doppelganger.
  • “The profits being capped at 100 times any investment.”
  • “The company explained this decision saying, ‘We need to invest billions of dollars in the coming years into large-scale cloud compute, attracting and retaining talented people, and building AI supercomputers.’ This transition from nonprofit to for-profit required OpenAI to balance its desire to make money with its stated commitment to ethical AI development.”
  • “This unconventional structure meant that Open AI had a board of directors, which in theory controls the entire corporate structure (which includes the charity and the capped profit company) – but which unlike other boards is not accountable to shareholders. The directors are in fact not allowed to own any stock to prevent a conflict of interest, because they are specifically not supposed to be aligned with shareholders.”
  • “The companies operating agreement – to investors – says – in writing: ‘It would be wise to view any investment in OpenAI in the spirit of a donation, with the understanding that it may be difficult to know what role money will play in a post-AGI world.’ Documents like this – that were written by an actual lawyer – highlight the problems we are starting to see from the combined popularity of science fiction in Silicon Valley and widespread microdosing of hallucinogens.”
  • “In the real world, where the role of money is reasonably well defined, Open AI is an unprofitable company and is expected to need to raise a lot more money over time from investors like Microsoft, to keep up with the high costs of building more sophisticated chatbots.”
  • “Despite this lack of profitability, the company is valued by investors at 86 billion dollars, and Bloomberg reported last weekend that ‘some investors were considering writing down the entire value of their OpenAI holdings to zero.'”
  • “Former colleagues would have an open door to follow and join a new AI unit, according to Microsoft chief Satya Nadella. As much of a win as this might have appeared for Microsoft (people were saying that they had managed to buy the hottest AI firm for zero), this might not have been the optimal outcome for them, as they would likely have had to deal with antitrust regulators and lawsuits from other Open AI investors.”
  • “The majority of Open AI’s 700 or so employees signed an open letter to the board demanding that the board resign and that they rehire Altman. The letter stated that the board had told the employee leadership team that allowing the company to be destroyed ‘would be consistent with the mission.’ The employees said that unless their demands were met, they would resign from Open AI and join the new subsidiary of Microsoft being headed up by Altman and Brockman.”
  • “You have to wonder what the employee contracts at Open AI look like that the entire staff could leave to work for a major investor in the company leaving Open Ai as an empty shell.”
  • “Typically, executives like Altman would have contracts that prevent them from hiring away key staff once they are no longer at the firm, and staff would have signed NDA’s preventing them from taking any technology with them.”
  • “The OpenAI story is a bit of a crazy one, where Microsoft and a number of other sophisticated investors agreed to put billions of dollars in, and employees got stock grants, all at an $86 billion valuation, without the contractual or fiduciary rights that investors might normally expect.”
  • Rival Anthropic has a similar structure.
  • “Bad corporate governance has been a growing issue particularly in Silicon Valley where companies like Google, Facebook and Snap structured their IPO’s such that founders were left with unchallenged power to do almost anything that they want.” Google and Facebook are garbage companies, but there are some scenarios where only founders can keep the company on a long-term vision rather than goosing quarterly profits (Jobs at Apple comes to mind).
  • Warren Buffet has a similar mechanism (A shares of stock only he controls) to keep control of Berkshire Hatheway.
  • “Since you are buying shares of companies in perpetuity, leadership who are not accountable to shareholders can take value destructive paths without answering to anyone. Meta’s Reality Labs division, which houses its efforts to build the metaverse, has lost around $46.5 billion dollars since 2019. Would Mark Zuckerberg have been able to waste this much money if he was accountable to investors?” I have a fairly strong suspicion that division is being used to hide all sorts of shenanigans.
  • Boyle is deeply suspicious of “stakeholder capitalism” as opposed to the old-fashioned, profit-maximizing kind.”

    • The thing missing from this summary, and all the coverage of the story I’ve seen, is why Altman was originally let go, and none of the principals involved seem to be talking about it…

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