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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

OpenAI staff threaten to quit unless Sam Altman returns; Abu Dhabi fund lined up to take control of Telegraph – as it happened

Sam Altman Emmett Shear OpenAI Twitch Greg Brockman Ashlee Vance United States Mira Murati Ilya Sutskever Microsoft
OpenAI is in turmoil after shock departure of co-founder Sam Altman last week
OpenAI is in turmoil after shock departure of co-founder Sam Altman last week Photograph: Costfoto/NurPhoto/Shutterstock

Summary

Time for a quick recap, after a busy day of developments.

The turmoil at generative artificial intelligence pioneer OpenAI has deepened, days after the organisation stunned the technology world by dismissing founder Sam Altman on Friday.

After investors applied pressure on OpenAI to reverse the decision, Altman paid a dramatic visit to the group’s offices yesterday afternoon, for negotiations about his return.

But hopes that he might be reappointed faded overnight. And this morning, it emerged that OpenAI were appointing the founder of Twitch, Emmett Shear, as interim CEO – replacing CTO Mira Murati who only took the reins on Friday.

Shear says he accepted the once-in-a-lifetime opportunity because he believe that OpenAI is “one of the most important companies currently in existence.”

Shear says he will hire an independent investigator to dig into the entire process leading to Altman’s dismissal, and reform OpenAI’s management and leadership team.

But the first sensational development of the day was that Microsoft is hiring Altman, and former OpenAI president Greg Brockman.

The pair “together with colleagues” will join Microsoft to lead a new advanced AI research team, the software giant’s CEO Satya Nadella revealed.

Microsoft’s share price touched a new record high this afternoon, extending this year’s gains to over 55%.

But the second dramatic twist is that a majority of OpenAI’s staff has signed an open letter threatening to resign unless ousted chief Sam Altman is reinstated.

The letter, signed by around 500 employees, warns that staff will leave unless the board quits, saying:

“We are unable to work for or with people that lack competence, judgment and care for our mission and employees.”

In other news…

Abu Dhabi-backed investment fund RedBird IMI has paved the way to take control of the Telegraph and Spectator publications after agreeing loans to repay debts owed by previous owners, the Barclay family.

Rishi Sunak hinted at business tax cuts to boost economic growth as he promised to reduce the tax burden “carefully and sustainably” and “over time”.

But Labour’s shadow business secretary has told corporate bosses that Rishi Sunak’s failure to grow the UK economy has made cutting taxes and increasing government spending harder to justify.

And chancellor Jeremy Hunt has been warned that combating the climate emergency will require higher taxes on wealth and big corporate polluters at the autumn statement.

The founder of General Motors-owned Cruise has stepped down less than a month after the driverless car company paused operations after an accident and the loss of permission to operate in California.

In the financial markets, the pound has hit a two-month high against the US dollar as investors bet that the Federal Reserve has reached the end of its interest rate-hiking cycle.

Updated

The future of OpenAI has been “thrown into chaos” today after hundreds of employees at the artificial intelligence company threatened to quit and join ousted CEO Sam Altman at Microsoft, the Washington Post points out.

They add:

“Honestly, it is heartbreaking to see such a world-changing organization be ripped apart,” said Sarah Guo, a venture capitalist and founder of Conviction.

“The previous standard-bearer for the AI revolution, the unassailable giant in the room is vulnerable, and new leadership will have their work cut out for them to build customer and employee trust. This completely changes the strategic landscape and emboldens every other player.”

The FT are reporting that Lloyds has given two extra weeks for the Barclay family to repay the money behind the Telegraph, in the deal that would pave the way for Abu Dhabi-backed Redbird IMI to take control of the British newspaper.

Redbird IMI, incidentally, are run by former CNN boss Jeff Zucker.

Updated

Analysis: Sam Altman’s OpenAI exit leads to rollercoaster for sector

Our global technology editor, Dan Milmo, has analysed the turmoil at OpenAI – and says the organisation now faces a dearth of AI talent.

Sam Altman and Greg Brockman were reportedly followed out of the door by three senior researchers: Jakub Pachocki, the director of research; Aleksander Mądry, who evaluated AI risks; and Szymon Sidor. On Sunday, OpenAI staff posted heart emojis next to re-posts of Altman’s message on X stating that he loves the OpenAI team “so much” – a gesture that has been interpreted as a willingness to join their former CEO at his next venture.

The messages became more overt in the wake of the Microsoft announcement, with Murati posting: “OpenAI is nothing without its people.” The gesture, reposted with a heart emoji by Altman, was repeated across X by multiple colleagues – who in turn were reposted by Altman with the same emoji.

That snowballed into threats of a mass resignation on Monday, when 550 of OpenAI’s 700 staff warned in an open letter they could quit if the board did not reinstate Altman and Brockman – and step down themselves. “Your actions have made it obvious that you are incapable of overseeing OpenAI,” they wrote.

More here

Abu-Dhabi backed fund says it is set to take control of Telegraph

Newsflash: an Abu-Dhabi backed fund has said it is set to take control of the Telegraph newspaper group, after agreeing loans to repay debts owed by its previous owners, the Barclay family.

The news from RedBird IMI comes a month after the sale of the Telegraph newspapers and the Spectator kicked off.

Lloyds Bank has been holding an auction process, after taking control of the titles from the Barclay family after a row over more than £1bn in unpaid debt.

The Barclays, though, had tabled an offer valuing the Telegraph newspaper group at £1bn in an attempt to deter rival bidders.

Yesterday, a group of Conservative MPs wrote to the government asking it to use the UK’s national security laws to investigate the Barclay family’s attempt to regain control of the Telegraph newspaper group with funding from Abu Dhabi.

A spokesman for RedBird IMI says:

“RedBird IMI, a joint venture between RedBird Capital of the US and International Media Investments of Abu Dhabi, has reached an agreement to provide a package of loans to the Barclay family allowing them to pay off their debt to Lloyds Bank in full and bring the Telegraph and Spectator out of receivership.

“RedBird IMI will provide a loan to the value of £600 million, secured against the Telegraph and Spectator.

“Additionally, International Media Investments will provide a loan of a similar amount secured against other Barclay family businesses and commercial interests.

“Under the terms of this agreement, RedBird IMI has an option to convert the loan secured against the Telegraph and Spectator into equity, and intends to exercise this option at an early opportunity.

“Any transfer of ownership will of course be subject to regulatory review and we will continue to co-operate fully with the Government and the regulator.”

The spokesman for RedBird IMI added:

“Following transfer of ownership, RedBird Capital alone will take over management and operational responsibility for the titles under the leadership of RedBird IMI chief executive Jeff Zucker.

“International Media Investments will be a passive investor only.

“RedBird IMI are entirely committed to maintaining the existing editorial team of the Telegraph and Spectator publications, and believe that editorial independence for these titles is essential to protecting their reputation and credibility.

“We are excited by the opportunity to support the titles’ existing management to expand the reach of the titles in the UK, the US and other English-speaking countries.”

Updated

Evercore ISI analyst Kirk Materne has written in a note that Sam Altman’s move to Microsoft is a “clear win” for the tech giant, and “should help offset concerns regarding potential near-term uncertainty at OpenAI.”

More here.

Over on FT Alphaville, Bryce Elder has written a rather witty piece on the drama in the artificial intelligence world, titled How to talk to an elderly relative about Altman, OpenAI and Microsoft.

You can see it all here (registration needed, but worth it), arguing that you probably don’t need to care very much about the drama.

But here’s a couple of key points, which help explain the situation to anyone without a firm grip on the fast-moving world of large language AI models.

Why was Altman fired?

He was not “consistently candid in his communications”, OpenAI said, without elaborating. The general theme of reporting so far is that the board was split over Altman’s commercialisation efforts, including his tapping up SoftBank for an AI chip venture.

But also, the Temple was running low on Wizards. Three of the more commercially minded board directors resigned earlier this year — Presidential candidate Will Hurd, LinkedIn cofounder Reid Hoffman and Shivon Zilis, a VC who’s been friendly at least once with OpenAI founder investor Elon Musk — which reduced the board to six and gave doomwarts like OpenAI chief scientist Ilya Sutskever greater influence.

Things came to a head at OpenAI’s maiden developer day on November 6, where Altman announced moves to give developers more freedom to develop custom versions of ChatGPT. Paying customers will be able to make use-specific bots that can tap into external sources of information by feeding the machine up to 300 pages of prompts. But the safety-minded types weren’t keen on the idea of letting loose millions of baby ChatGPTs on corporate intranets and the open web.

If he upsets the geeks so much, why has Microsoft hired Altman?

To remove the risk that he sets up a competitor to OpenAI. The thing Microsoft wants least is to have sunk $13bn on backing the Betamax of AGI.

There’s been no suggestion yet that Altman will be restricted to one job. As well as the AI chip startup he has a nuclear fission company, an AI device developer and the Worldcoin eyeball-scanning project, so the time he can give to running Microsoft’s new AI special-ops division might be limited. But he won’t be running someone else’s AI special-ops division and that’s apparently what matters most: Microsoft shares are up a bit in Monday premarket [and now in the actual market too].

Updated

Microsoft shares at new record high

Today’s rally has pushed Microsoft’s shares to a new record high, extending their gains this year to over 55%.

They gained as much as 1.9% to hit $377.1, above last Thursday’s record high.

Reuters has the details:

The Nasdaq led gains among the main U.S. stock indexes on Monday as Microsoft climbed on news that former OpenAI head Sam Altman will join the software giant, while investors awaited more clues on when the Federal Reserve might begin cutting interest rates.

Microsoft’s shares advanced 1.4%, notching a record high after CEO Satya Nadella said Altman is set to join the company to lead a new advanced AI research team.

The information technology sub-index housing the stock was among top sectoral gainers, up 0.7%.

Other megacap stocks were mixed, with Amazon.com edging 0.7% higher, while Alphabet slipped 0.4%.

Updated

Nicholas Zieglasch, Head of Equity Research at financial services firm Killik & Co, says Microsoft has done well out of the turmoil at OpenAI.

Zieglasch explains:

“The global technology giant today announced it had hired the ex-CEO of OpenAI to lead a new advanced AI research team. It also confirmed that it is maintaining its existing relationship with OpenAI. We see the announcement as positive for Microsoft as it bolsters its internal AI capabilities while still having access to OpenAI tools.

“Earlier last week, Microsoft also announced its first in-house designed CPU and AI accelerators. These are important pieces to be able to offer fully vertically integrated cloud infrastructure, allowing maximum performance and efficiency to be extracted for relevant workloads. It will continue to offer access to NVIDIA and AMD accelerators, and recently announced a new NVIDIA based Azure supercomputer that has taken the number three rank on the global supercomputer list.

“We continue to see Microsoft as one of the key enablers of enterprise digital transformation, across the front office, back office and operational assets. Azure is the leader in enterprise cloud infrastructure in terms of offering, with more data centres than any peer and as well as the best AI infrastructure for both training and inference. Its Teams product is increasingly becoming the communications tool of choice within enterprises. It is also a global leader in cybersecurity and identity management. It is investing in generative AI as the next leg of technology disruption.

Shares in Microsoft have risen 1% at the start of New York trading, as investors digest the turmoil at OpenAI.

That recovers most of Friday’s losses, when MS’s shares slid after the surprise departure of Sam Altman from OpenAI was announced.

OpenAI staff threaten to quit unless board resigns and Altman returns

Newsflash: The staff of OpenAI are in open revolt over the shock departure of Sam Altman.

Around 500 staff have signed a letter threatening to leave unless the board resigns and reinstates Sam Altman as CEO, along with cofounder and former president Greg Brockman.

The letter says OpenAI (the firm behind ChatGPT) has pushed the field of artificial intelligence to new frontiers, but warns:

“The process through which you terminated Sam Altman and removed Greg Brockman from the board has jeopardized all of this work and undermined our mission and company.

Your conduct has made it clear you did not have the competence to oversee OpenAI.”

The letter has emerged just hours after Microsoft revealed it had hired Altman and Brockman, just after weekend negotiations to reinstate Altman under pressure from investers floundered.

In the letter, the staff say they may choose to resign and join Microsoft’s new AI division which will be run by Altman and Brockman.

They tell the board that the letter’s signaturies are “unable to work for or with people that lack competence, judgment and care for our mission and employees.”

Technology journalist Kara Swisher has posted the letter on X (formerly Twitter) – and points out that OpenAI’s chief scientist, Ilya Sutskever, has signed it, even though he is a member of the board that fired Altman.

As flagged earlier, Sutskever has posted on X today that “I deeply regret my participation in the board’s actions”.

That came shortly after OpenAI appointed Emmett Shear, the co-founder of Twitch, as interim CEO.

Altman had posted a photo yesterday of himself in the OpenAI offices, wearing a guest visitor badge for the “first and last time”, fuelling speculation he could be dramatically reappointed just a few days after being ousted.

Updated

Labour's Reynolds: Failure to grow economy makes tax cuts harder

Labour’s shadow business secretary has told corporate bosses that Rishi Sunak’s failure to grow the UK economy has made cutting taxes and increasing government spending harder to justify.

Speaking at the CBI’s “general election countdown” conference in Westminster, Jonathan Reynolds said an incoming Labour government would focus on growing the economy to help finance its spending plans, my colleague Richard Partington reports.

Reynolds was speaking after Sunak used his speech in north London this morning to argue the time was coming for tax cuts, ahead of chancellor Jeremy Hunt’s autumn statement on Wednesday.

Reynolds dodged questions at the CBI conference about whether now was the right time for tax cuts, or if Labour would be comfortable with maintaining the highest tax levels as a share of the economy in 70 years to finance its spending plans.

However, he said an incoming Labour government would focus on growing the economy.

Reynolds said:

“The focus of the government has changed. The focus we’ve got is the right set of priorities for the future of the country,” he said.

“Unless we get the economy growing more strongly than it has done since the Conservatives came to power, all of these questions about tax cuts, more spending, public services, they all get harder. And that’s why our absolute focus is on which measures will make the economy grow faster, will attract more private business investment.”

Asked about a comment Sunak made on Monday that Labour lacked political courage to cut the UK’s national debt, Reynolds quipped, “lectures in political courage from the prime minister?,” drawing laughter and applause from the crowd of business leaders.

He added:

“If you want to compare the evidence base of previous Labour governments, or the future plans we have, or what the Conservative party has delivered over the past 13 years, I think the evidence base is pretty stark.

“There has to be a level of self-awareness from the government and the statements they can make.”

Back in the turbulent world of artificial intelligence, OpenAI’s chief scientist Ilya Sutskever has said he “deeply regrets” his involvement in the shock dismissal of Sam Altman last Friday.

Sutskever has posted that he never intended to harm OpenAI, and will try to reunite the company.

The comments come hours after the organisation appointed Emmett Shear as interim CEO…. and Altman dramatically joined major OpenAI investor Microsoft.

Labour’s shadow chancellor of the Duchy of Lancaster and national campaign co-ordinator, Pat McFadden, has criticised Rishi Sunak for unveiling five new long-term promises today.

McFadden says:

“The Tories have failed to deliver on so many pledges from the past. Why should people believe they will deliver on pledges for the future?

“It sums up this Conservative Party to claim things will be better tomorrow when they can’t even fix the problems of today.

“After 13 years of Conservative governments, working people have been left worse off and the Conservative economic record lies in tatters. Only Labour can get our economy growing and deliver change for working people.”

In the foreign exchange markets, the pound touched its highest level against the US dollar in two months this morning.

Sterling rose $1.251 briefly around 10am, for the first time since 13 September.

The rally came as the dollar hit a two-month low against a basket of currencies, as traders continue to bet on US interest rates being cut in 2024.

Markets have priced out the risk of further rate increases from the Federal Reserve after US inflation fell to 3.2% in October, amid several weak economic data releases last week.

Here’s The Times’ Steven Swinford on Sunak’s speech:

The Night Time Industries Association has warned that one in five night time economy businesses, such as bars, nightclubs and live music venues, face collapse in January unless “substantial tax reductions” are announced in the autumn statement.

A poll of NTIA members found that:

  • 20% of Businesses polled are facing potential closure in January without government support

  • 72% of Businesses are either barely breaking even or losing money

  • 95% of Businesses polled requested VAT cuts for the sector

  • 78% of Businesses polled requested an extension of business rates relief

Michael Kill, CEO of the NTIA, warns:

“Without swift and decisive action from the government, we are on the precipice of witnessing the collapse of the night time economy and creative industries. The extension of business rates relief and a VAT cut are not only necessary for immediate survival but are crucial for the survival of businesses, but also in laying the foundation for future growth and job creation.”

“The Night Time Industries Association remains committed to working collaboratively with the government to develop and implement effective policies that will safeguard the future of these vital industries. The time to act is now, and NTIA urges policymakers to prioritize the hospitality, night time economy and creative industries in the Autumn budget this week”.

Rishi Sunak also spoke of the need to focus on the ‘supply side’ of the economy, which may be a hint that business tax cuts will be prioritised.

He said:

We want to support businesses to invest, innovate, and grow through lower taxes and simpler regulation.

Where we provide support, it should be targeted and strategic.

Business groups have been pushing for the current temporary “full expensing regime”, which lets firms offset investment spending against their tax bill, to be made permanent.

Some City economists believe Jeremy Hunt will announce tax cuts in Wednesday’s autumn statement.

Goldman Sachs have estimated that Hunt now has approximately £25bn of headroom which he can spend and still keep within the government’s fiscal mandate, thanks to a pick-up in tax receipts.

In a note to clients, Goldman predict the chancellor will make “modest tax reductions” costing up to £10bn, keeping some firepower back for the budget next March.

They say:

Measures that the government could consider include a reduction in inheritance tax, an extension of the full expensing capital allowances regime, or a cut in stamp duty

That said, we think that larger tax cuts are less likely at next week’s statement, because a more substantial fiscal loosening would risk raising inflation and interest rates. Instead, we expect the government to conserve the majority of its headroom for the Spring Budget.

Rishi Sunak also claimmed that the UK welfare system is not currently “sustainable”.

He was asked whether the government is planning a squeeze on welfare payments in the autumn statement.

The PM declined to “pre-empt” any announcements on Wednesday, but argued the current situation isn’t “good”.

He said:

“Our view on the welfare system is that it should be compassionate, it should be fair and it should be sustainable…

“With over 2 million people of working age who are not currently working, that isn’t a good situation.

“It’s not sustainable for the country, for taxpayers. It’s not fair. But it’s also not compassionate to write people off.

“And over a decade we’ve seen the percentage of people who are essentially deemed not to be able to do any work has tripled. That doesn’t seem like a system that’s working properly. And that’s why we will look to make sure that the system is reformed and supports those who can work to do so.”

It emerged last Thursday that welfare claimants who “refuse” to engage with their jobcentre or take work offered to them may lose benefits.

And as flagged earlier [see 10.29am post], there are concerns that benefits may be raised by October’s lower inflation reading (4.6%) not September’s (6.7%) [see earlier post].

Here’s Sam Coates of Sky News on Rishi Sunak’s speech:

Rishi Sunak went on to argue that a Labour government would be as dangerous as his predecessor, Liz Truss, and her chancellor Kwasi Kwarteng.

He claimed Sir Keir Starmer and Rachel Reeves wanted to continue the “big government, big spending approach” of the pandemic, with up to £28bn of borrowing a year for Labour’s green plans.

The PM said:

“This makes the same economic mistake as last year’s mini-budget, blowing tens of billions of pounds on unfunded spending is just as dangerous as blowing tens of billions of pounds on unfunded tax cuts.”

Those unfunded tax cuts sparked a heavy selloff in government bonds last year, while the pound fell to a record low after Kwarteng said. last September that more tax cuts were coming.

Sunak announces five long-term promises

Rishi Sunak has announced five “long-term decisions” which, he says, the goverment will prioritise for the economy and public finances.

They are… reducing debt, cutting tax, building sustainable energy, backing British businesses and delivering world-class education.

Updated

Sunak: Over time, we can and we will cut taxes

British Prime Minister Rishi Sunak speaks during the opening session of the Global Food Security Summit at Lancaster House today
British Prime Minister Rishi Sunak speaks during the opening session of the Global Food Security Summit at Lancaster House today Photograph: Reuters

UK prime minister Rishi Sunak has declared he believes in cutting taxes “carefully and sustainably”, in a speech on the UK economy.

Speaking ahead of Wednesday’s autumn statement, Sunak claimed his government’s approach was “one that gets inflation down and keeps it down”.

Sunak says:

“One that believes the private sector grows the economy and, where government has a role, it must be limited.

“One that believes in cutting taxes, but doing so carefully and sustainably.

“And one that is ambitious about the unprecedented opportunities for this country from the new wave of technology.”

Sunak then hailed last week’s drop in inflation to 4.6%, saying he has hit his pledge of halving inflation this year, so it is now time to “look forward towards the future economy that we want to build”.

However, the UK’s actual inflation target, which the Bank of England is charged with setting is actually 2%.

Nevertheless, Sunak argues that the government could now look at cutting taxes “over time” – possibly a hint that they could come next year, rather than this week?

He says:

“We will do this in a serious, responsible way, based on fiscal rules to deliver sound money, and alongside the independent forecasts of the Office of Budget Responsibility.

“And we can’t do everything all at once. It will take discipline and we need to prioritise.

“But over time, we can and we will cut taxes.”

The head of the CBI, Rain Newton Smith, has been speaking at the business group’s conference today.

Newton Smith says she is “really proud of the journey the CBI has gone through” (after the Guardian reported claims of sexual misconduct and ‘toxic culture’ at the CBI), reports my colleague Richard Partington.

Newton Smith adds that the CBI has “absolutely’ secured the funding it needs; in September, it secured emergency funding from a series of banks.

Ashtead shares slide after cutting guidance

Back in the City of London, shares in equipment rental firm Ashtead have tumbled over 11% after it cut its revenue and profit guidance this morning.

Ashtead, which rents out everything from diggers and fencing to lighting and TV equipment, told shareholders its annual profit would come in below market expectations.

It is also taking a depreciation charge of $2.1bn for the year.

Ashtead blames a “significantly quieter hurricane season” than in recent years, and fewer natural disasters such as wildfires.

It has aso been hit by the Hollywood writers’ and actors’ strikes, which have hit its Film & TV business in Canada significantly, and also affected its US and UK businesses.

Ashtead’s shares are down 12%, the biggest faller on the FTSE 100.

AJ Bell investment director Russ Mould says:

“It may seem unfair to drive a share price down by more than 10% when the profit forecast downgrade is only 2% to 3%, but investors do not seem to be in a forgiving mood when it comes to Ashtead’s less optimistic trading outlook”, says

“In many ways, the equipment hire specialist is a victim of its own success. Shareholders have enjoyed a string of upgrades to earnings estimates in the past couple of years, so even this very mild disappointment has come as a considerable shock.

Ben Laidler, analyst at trading and investment platform eToro, says:

“Microsoft investors appear to have reacted positively to the news that recently fired OpenAI CEO Sam Altman has joined the behemoth’s ranks to front a new AI division, with the share price up 2.5% [in pre-market trading].

The November 2022 launch of ChatGPT by OpenAI triggered what has arguably been the fastest consumer tech adoption in history. But Friday’s shock firing of Altman shows that this has come with significant growing pains.

It also put tech giant Microsoft in a difficult position, as the biggest backer and 49% shareholder of OpenAi, and the biggest beneficiary of its soaring valuation to a reported $86 billion.

Microsoft opposed Altman’s firing and will hope that he can add some stardust to their ‘in-house’ AI push, whilst the firm will also hope that new OpenAI CEO Emmett Shear can stabilise the AI-pioneer and the value of its investment.”

Joshua Mahony, chief market analyst at Scope Markets, confirms that Microsoft’s shares are set to rise when Wall Street opens in under four hours.

Mahony says:

Microsoft shares are expected to open over 2% after the firm swooped in to pick up Sam Altman to head up their advanced AI research team.

Huge upheaval over the weekend saw the OpenAI Co-founder ousted from his role as CEO, raising concerns that he would spark a exodus of OpenAI staff to form a new ChatGPT competitor.

Nonetheless, Microsoft have moved to secure their investment, with the decision to hire Altman helping minimise the chance of an OpenAI exodus, whilst also adding expertise for their massive AI operation.

The removal of Sam Altman as CEO and a director at OpenAI last Friday has exposed the divisions that have built up at the artificial intelligence group over the years.

As Bloomberg put it:

One of the fissures was Altman’s drive to turn OpenAI, which began as a nonprofit organization, into a successful business — and how quickly he wanted the company to crank out products and sign up customers.

That ran headlong into board member concerns over the safety of artificial intelligence tools capable of generating text, images and even computer code with minimal prompting.

Fallout from the board’s decision to defy investors and not reappoint Altman over the weekend is likely to be widespread, they add:

Thrive Capital had been expected to lead an offer for employee shares, a deal that would value OpenAI at $86bn.

As of this weekend, the firm had not yet wired the money and it told OpenAI that Altman’s departure will affect its actions.

Fears grow that UK government will use October's inflation reading for benefit upratings

Back in the UK, is the government planning to hit benefits claimants with a smaller rise in their payments next April?

Steve Webb, the former pensions minister, has spotted that the Department for Work and Pensions has scheduled “an ‘ad hoc’ publication on benefit upratings on Wednesday”, which is the day of the autumn statement.

Webb predicts:

Looks like this will be their defensive doc, justifying using the more recent inflation figure.

That might be a sign that chancellor Jeremy Hunt is planning to use October’s annual inflation rate, of 4.6%, to set increases in benefits, rather than September’s reading (6.7%) as usual.

The Institute for Fiscal Studies has calculated that using the October rather than September inflation rate would cut working-age benefits spending by about £3 billion in 2024–25, largely by reducing entitlements for the 8 million working-age households receiving means-tested or disability benefits.

That could provide firepower for Hunt to cut taxes. But it would also be a blow to millions of strugging households, who have already suffered from the cost of living squeeze.

Several anti-poverty charities have already warned Hunt not to squeeze benefits by using October’s inflation reading:

Updated

Full story: Microsoft hires former OpenAI CEO Sam Altman

Microsoft has hired Sam Altman as head of new advanced artificial intelligence team after attempts to reinstall him as chief executive of OpenAI failed.

The appointment was confirmed in a statement on X by the Microsoft CEO, Satya Nadella, on Monday.

At the end of a dramatic weekend of boardroom drama, the non-profit board of the San Francisco-based OpenAI has installed Emmett Shear, the co-founder of video streaming site Twitch, as the company’s third CEO in three days, according to multiple reports.

Microsoft, OpenAI’s largest investor, has moved quickly to take on a key figure in the AI industry. It said on Monday morning it had appointed Altman and OpenAI’s former president, Greg Brockman, to lead a new advanced AI team at the company.

More here.

Shear: I have a duty to help OpenAI by becoming interim CEO

Emmett Shear has confirmed he has accepted the “once-in-a-lifetime opportunity” to become the interim CEO of OpenAI, and will reform its management and leadership team.

Posting on X, Shear says he had been enjoying time with his 9-month old son, whose arrival prompted his departure from Twitch.

But he says, he is returning to work because he believes OpenAI is one of the most important companies currently in existence.

Shear says:

When the board shared the situation and asked me to take the role, I did not make the decision lightly. Ultimately I felt that I had a duty to help if I could.

Shear says OpenAI’s partnership with Microsoft “remains strong” (a claim that will now be tested by MS’s hiring of Sam Altman).

And he says “the process and communications” around Altman’s removal last Friday has been “handled very badly” (something that’s hard to argue with).

Shear says he will make whatever changes are necessary, and had a three-point plan for the next 30 days:

  • Hire an independent investigator to dig into the entire process leading up to this point and generate a full report.

  • Continue to speak to as many of our employees, partners, investors, and customers as possible, take good notes, and share the key takeaways.

  • Reform the management and leadership team in light of recent departures into an effective force to drive results for our customers.

He also adds that he “checked on the reasoning” for Altman’s dismissal, explaining:

The board did *not* remove Sam over any specific disagreement on safety, their reasoning was completely different from that. I’m not crazy enough to take this job without board support for commercializing our awesome models.

Bill Blain, market strategist at Shard Capital, predicts that lots of OpenAI staff will jump at the opportunity to follow Sam Altman to Microsoft.

And whatever happens, OpenAI chief scientist Ilya Sutskever and the organisation’s board – who dramatically fired Altman last week – have lost, Blain argues, saying:

OpenAI had a “sort-of” monopoly on AI, giving some hope it could be controlled by its not-for-profit structure. That is now blown.

AI startups around the world will hire whoever they can from the trainwreck it now is. The cork is out the bottle.

Spotify CEO Daniel Ek has reached for a popular meme to sum up the AI turmoil:

Microsoft’s shares are up over 2% in premarket trading, after announcing the hiring of Sam Altman and Greg Brockman to lead a new AI research team.

They had fallen 1.7% on Friday after Altman’s departure from OpenAI was announced, followed by another 1% drop in afterhours trading, but that’s now been reversed.

Microsoft’s shares are up over 50% so far this year, lifted in part by the excitement around AI. In January it agreed to invest $10bn in OpenAI.

Updated

“In a rollercoaster few days for OpenAI, fired former boss and co-founder Sam Altman has been hired by Microsoft’s new AI team”, says Victoria Scholar, head of investment at interactive investor, adding:

Meanwhile the former boss of Twitch Emmett Shear has taken over the CEO role at the ChatGPT maker.

Despite the changes, Microsoft’s CEO Satya Nadella said the tech giant ‘remains committed’ to its partnership with OpenAI.

It is understood that scientists on OpenAI’s board were concerned about the company’s pace of expansion, spearheaded by Altman and former President and co-founder Greg Brockman who is also moving to Microsoft.

The turmoil at OpenAI has resulted in a “big win” for Microsoft, says Jesse Cohen, global markets analyst at Investing.com:

Altman: The mission continues

Sam Altman has posted that “the mission continues”, as he heads to Microsoft to head up a new team conducting artificial intelligence research,

Microsoft hires Sam Altman to lead advanced AI research team

Newsflash: Microsoft has sensationally hired Sam Altman and Greg Brockman to lead a new advanced AI research team, just days after the pair left OpenAI.

Microsoft’s chief executive, Satya Nadella, has announced the surprise move, which could shake up the AI industry.

It comes just hours after it became clear that Altman was not returning to OpenAI, with Emmett Shear being named as interim replacement instead.

Perhaps ominously for OpenAI, Nadella says Altman and Brockman will join “together with colleagues”.

Nadella also says that Microsoft – a key investor in OpenAI – is looking forward to getting to know Emmett Shear and OAI’s new leadership team.

In a post on X, Nadella says:

We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners.

We look forward to getting to know Emmett Shear and OAI’s new leadership team and working with them.

And we’re extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team. We look forward to moving quickly to provide them with the resources needed for their success.

Updated

The Information reports that dozens of OpenAI staffers internally announced they were quitting the company last night after learning that Sam Altman will not return as CEO.

They say:

The moves could hamper the company’s ability to move forward after the shock firing.

It also will likely change the course of the artificial intelligence field and embolden a host of rivals—namely Google—that have been seeking to hire OpenAI staff over the last 48 hours.

They add that some OpenAI staff have indicated they would be interested in joining Altman if he started a new AI venture.

Bloomberg’s Ashlee Vance reports that a ‘game of chicken’ was played over the weekend, as OpenAI’s board faced pressure to rehire Sam Altman and Greg Brockman, before turning to Emmett Shear…

… and that Microsoft, a key investor in OpenAI, is not pleased by developments:

Introduction: OpenAI turns to Emmett Shear to succeed Sam Altman as chief executive

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The question of who will run artificial intelligence pioneer OpenAI is gripping Silicon Valley, after the shock dismissal of CEO Sam Altman on Friday night.

And after a flurry of speculation that Altman will return, it appears OpenAI’s board has selected Emmett Shear, co-founder of video streaming service Twitch, as its interim chief executive.

OpenAI had faced calls from investors to reinstate the ousted Altman.

But Bloomberg reports that Shear, a computer scientist, has got the nod because “he appeared to recognize the existential threats that AI presented”, and has the expertise to lead a large engineering group.

Shear stepped down as chief executive officer of Twitch in March, saying he was now ready to move to the next phase of life, having become a father.

Shear would be OpenAI’s second interim CEO in under a week, as the board had initially appointed chief technology officer Mira Murati as interim CEO on Friday afternoon.

Altman has been regarded as the leading voice in the AI field since his company released ChatGPT in November 2022. But he was stunningly ousted from OpenAI on Friday night, with the board accusing him of “being not consistently candid in his communications”.

President and co-founder Greg Brockman quit the next day, saying he had been told he was being removed from the board, adding that he continues to “believe in the mission of creating safe AGI that benefits all of humanity.”

By Sunday, rumours were swirling that Murati was looking to rehire Alman and Brockman in some capacity.

Chief Strategy Officer Jason Kwon told staffers in a memo Saturday night that OpenAI is “optimistic” it can bring back Sam Altman, Greg Brockman and other key employees who departed in the wake of Altman’s sudden firing on Friday, C

And there was excitement last night that a deal could be close, after Altman posted a picture of himself wearing an OpenAI visitor badge, writing, “first and last time i ever wear one of these.”

But the coup against Altman will not, it seems, be reversed.

OpenAI co-founder Ilya Sutskever has told staff that Shear has a “unique mix of skills, expertise and relationships that will drive OpenAI forward,” according to a memo viewed by The New York Times.

But the decision could deepen a crisis precipitated by the board’s sudden ouster of Altman and its removal of President Greg Brockman from the board on Friday, reports tech news site The Information.

The agenda

  • 10am GMT: Eurozone construction PMI for September

  • 3pm GMT: Conference Board leading economic index on US economy

  • 6.45pm GMT: Bank of England governor Andrew Bailey to give 2023 Henry Plumb Memorial Lecture

Updated

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