OpenAI is almost a shell company now, says Wedbush's Dan Ives

THE WAY IT ALL HAPPENED. SO MUCH TO BREAK DOWN ON THIS STORY, AND WE HAVE THE PERFECT PANEL TO DO IT HERE ON SET, STEVE KOVACH, OUR TECH REPORTER, DAN IVES, MANAGING DIRECTOR, CHIEF TECHNOLOGY CORRESPONDENT AT AXIOS. WELCOME TO ALL OF YOU. STEVE, I’LL START WITH YOU ANYTHING SINCE THE NEWS LAST HOUR THAT NOW 700 OF THE 770 EMPLOYEES ARE THREATENING TO RESIGN >> NOT MUCH MOVEMENT I WILL SAY THE CONVERSATION HAS SHIFTED AND WE TOUCHED ON THIS A LITTLE LAST HOUR AT THE TOP OF YOUR SHOW, THE CONVERSATION HAS KIND OF SHIFTED TO THIS

DISBELIEF THAT ALTMAN IS EVER GOING TO JOIN MICROSOFT. THERE’S THIS IDEA THAT WITH SO MANY EMPLOYEES THREATENING TO WALK OUT THE DOOR, THERE’S NO COMPANY LEFT TO MANAGE, SO THE BOARD MAY HAVE NO ALTERNATIVE BUT TO INVITE ALTMAN BACK UNDER THOSE CONDITIONS HE WAS REQUESTING OVER THE WEEKEND. >> WHAT WERE THE CONDITIONS? >> UNCLEAR, BUT BASICALLY NO MORE BOARD MEMBERS I KNOW BRETT TAYLOR HAS BEEN THE FORMER SALESFORCE CO-CEO, AND THAT NAME WAS SOMEONE THEY WANTED TO BE ON THE BOARD AND THAT WAS TOSSED AROUND OVER THE WEEKEND AS WELL AS PART OF CONDITIONS FOR

COMING BACK, SOME KIND OF VOTING POWER, PERHAPS. IF HE DOESN’T JOIN MICROSOFT, MICROSOFT HAS EGG ON ITS FACE AFTER MAKING THIS BIG ANNOUNCEMENT EARLY IN THE MORNING

BEFORE MARKETS OPENED, SAYING WE’RE BRINGING SAM IN AND HIS TEAM AND HIS GROUP OF CLOSE CONFIDANTS. >> ULTIMATELY IT WOULD BE BETTER FOR OPENAI TO BE SOMETHING OF WHAT IT WAS A WEEK AGO, VERSUS THE SHELL OF A COMPANY THAT REMAINS. >> THE OTHER THING, ARE THEY ACQUIRING A COMPANY FOR BASICALLY NEXT TO NOTHING? WE TALK A LOT ABOUT HOW MUCH MICROSOFT HAS INVESTED IN OPENAI, $13 BILLION. THEY

HAVEN’T MADE ALL THAT MONEY AND A LOT OF THAT VALUE IS TIED UP IN THINGS LIKE CREDITS FOR USING THEIR CLOUD SERVICE. IT’S NOT LIKE MICROSOFT HAS WRITTEN A CHECK AND OWNS THE STAKE. THERE’S STILL A LOT OF MONEY IN FLUX. >> WHAT DO WE KNOW ABOUT HOW THIS SPUN OUT OF CONTROL AND GOT SO OUT OF ROUND? >> YEAH, I MEAN, IT’S PRETTY UNPRECEDENTED, I SPENT THE WEEKEND REPORTING ON IT. NO ONE HAS SEEN ANYTHING LIKE IT IT’S VERY CLEAR THAT THERE WERE A LOT OF THINGS THAT WEREN’T TAKEN INTO ACCOUNT WHEN THESE DECISIONS

WERE MADE BY THE BOARD. JUST LOOKING AT THE COMMUNICATIONS AND NOT CONSULTING, AS WE BROKE ON FRIDAY, THEY GAVE MICROSOFT THEIR BIGGEST PARTNER AND INVESTOR ONE MINUTE NOTICE SO IT WAS CLEAR FROM THE MOMENT THAT THIS WAS GOING TO BE A BIGGER DEAL THAN THEY ANTICIPATED. THIS ISN’T JUST LIKE, OH, WELL, WE’LL REPLACE THE CEO. AGAIN, IT’S UNPRECEDENTED. IT’S HARD TO THINK OF ADJECTIVES. >> DAN, WHO OWNS OPENAI AND WHO IS GOING TO OWN IT >> LOOK, THIS WAS A CLOWN SHOW, BY THE OPENAI BOARD. AND ULTIMATELY IT’S REALLY NOW MICROSOFT AND NADELLA THAT ARE

GOING TO OWN OPENAI IN TERMS OF ALTMAN AND BROCKMAN AND EVERYONE AT MICROSOFT AND NOW OPENAI FOR ALL INTENTS AND PURPOSES IS ALMOST A SHELL COMPANY. EVERYONE NOW GOES TO MICROSOFT I WOULD ARGUE THAT MICROSOFT IS IN A STRONGER POSITION TODAY THAN THEY WERE IN THE TWILIGHT ZONE SCENARIO, THAN THEY WERE BEFORE THIS ALL STARTED ON FRIDAY AND I THINK IT’S AN EXAMPLE OF THIS BOARD WERE LIKE 8-YEAR-OLDS PLAYING CHECKERS AND NADELLA, THE GRANDMASTER CHESS PLAYER, ULTIMATELY IS THE ONE THAT SWOOPED IN, AND NOW IT’S MICROSOFT FOR THE STRIVICTORY. >> THE ONLY QUESTION I HAVE,

WHAT ABOUT THE CHATGPT PRODUCT IT’S STILL AN OPENAI PRODUCT THIS COMPANY IS NOW IN COMPLETE DISARRAY AND THERE ARE CLIENTS WHO ARE TRYING TO FIGURE OUT BECAUSE THEY HAVE TO USE IT TODAY AND TOMORROW AND THE NEXT DAY. DO THEY NEED TO QUICKLY FIND A SUBSTITUTE OR NOT? >> TO THAT POINT, THE SOFTWARE HAS ALREADY BEEN FULLY INTEGRATED AND STEVE KNOWS THIS, THAT’S THE KEY WHERE THE TECHNOLOGY IS. SO MICROSOFT FELT THEY WERE IN A POSITION OF STRENGTH TO DO THIS AS WELL. LOOK, THEIR BACK WAS AGAINST THE WALL WHEN THIS ALL STARTED RIGHT NOW,

IT’S NOT JUST ABOUT TECHNOLOGY, THEY’RE GOING TO HAVE ALL THOSE DEVELOPERS. ALTMAN, BROCKMAN IN HOUSE, AND I THINK THIS COULD ULTIMATELY START FOR THEM TO BE ABLE TO FOCUS ON CHIPS. >> YOU’RE ASKING WHO OWNS CHATGPT. IT ALMOST DOESN’T MATTER BECAUSE WHAT WE SAW MICROSOFT DO IN JANUARY OF THIS YEAR WAS TAKE THAT FOUNDATIONAL TECHNOLOGY THAT OPENAI MADE, INTEGRATE IT INTO BING. THEY HAVE BING CHAT ENTERPRISE, WHICH COMPETES WITH CHATGPT. MICROSOFT IS SELLING THAT PRODUCT TO BUSINESSES. YOU CAN USE IT TO CODE OR DO WHATEVER YOU WOULD WITH CHATGPT. IF OPENAI DISAPPEARS BY THE END

OF TODAY, THAT PRODUCT WILL STILL EXIST, STILL OPERATE FINE AND MICROSOFT CAN STILL SELL IT. >> WHAT DOES HAPPEN TO OPENAI, THE COMPANY? DOES IT CEASE TO EXIST >> WELL, THERE’S TWO SCENARIOS RIGHT NOW. ONE IS THAT MICROSOFT, THEY DO INDEED — MOST OF THE COMPANY DE-CAMPS TO MICROSOFT AND THERE ISN’T OPENAI AS WE KNOW IT THE OTHER, AND I THINK WE SHOULD POINT OUT THIS IS PROBABLY CERTAINLY A LIKELY SCENARIO, IF NOT AS LIKELY, IS THAT ULTIMATELY UNDER THIS MUCH PRESSURE THE BOARD DOES RESIGN AND WE GO BACK TO HAVING AN OPENAI EITHER WAY,

MICROSOFT IS IN A STRONGER POSITION, I TOTALLY AGREE WITH DAN EITHER THEY HAVE MORE CONTROL OF OPENAI THAN BEFORE, OR OPENAI EMPLOYEES WORK FOR MICROSOFT I THINK THE POINT ABOUT DEVELOPERS IS IMPORTANT. THERE ARE A LOT OF PEOPLE, START-UPS THAT HAVE BUILT THEIR COMPANY THAT DON’T HAVE THE POSITION MICROSOFT DOES, THAT DO RELY ON OPENAI’S APIs, THAT RELY ON THEIR TECHNOLOGY, AND THERE’S A LOT OF CONCERN ABOUT THAT. OPENAI, EVERYTHING IS WORKING TODAY AS IT SHOULD BE, AND PROBABLY CAN FOR THE SHORT TERM. BUT I THINK A LOT OF COMPANIES THAT BUILT THEIR BUSINESS DEPENDING

ON OPENAI ARE CERTAINLY WONDERING ABOUT THAT CHOICE RIGHT NOW. >> AM I RIGHT, DAN, THAT MICROSOFT OWNED SOME 49% OF OPENAI WHO OWNED 51%? >> AND THEN THERE WERE OTHER INVESTORS IN TERMS OF — IF YOU THINK ABOUT THE WAY IT WAS STRUCTURED, MICROSOFT DID NOT HAVE A BOARD SEAT. BUT THE BEST WAY TO THINK ABOUT IT IS THAT $10 OR $13 BILLION THAT THEY PAID, THEY’RE NOW WHAT’S CALLED $90 BILLIONS IN TERMS OF VALUATION, THEY GOT $90 BILLION FOR $13