OpenAI is discussing giving Chief Executive Officer Sam Altman a 7% equity stake in the company and restructuring to become a for-profit business, people familiar with the matter said, a major shift that would mark the first time Altman is granted ownership in the artificial intelligence startup.

The company is considering becoming a public benefit corporation, tasked with turning a profit and also helping society, said the people, who asked not to be identified because the information is private. The transition is still under discussion and a timeline has not been determined, one of the people said.

OpenAI is mulling the changes against the backdrop of an exodus of senior managers. Chief Technology Officer Mira Murati said on Wednesday she is leaving, a surprise move that marks the latest high-profile departure from the startup. In the months after it suddenly fired and then rehired Altman last year, OpenAI has been in a state of flux—losing multiple managers and shifting the structure of some of its teams.

OpenAI was founded in 2015 as a nonprofit research organization with the goal of building artificial intelligence that would be safe and beneficial to humanity. In keeping with those origins, Altman had not taken equity, stressing the company was meant to broadly benefit society and that he had enough money.

Yet as the value of the business soared, it’s been increasingly difficult to stick with those ideals. In 2019, the company created a for-profit subsidiary to help fund the high costs of AI model development, and has since drawn billions in outside investment from Microsoft Corp. and others.

OpenAI is currently working to raise $6.5 billion at a $150 billion valuation, which would make it one of the most valuable startups in the world, Bloomberg reported this month. That boost on top of the possible new equity could add more than $10 billion to Altman’s net worth, according to the Bloomberg Billionaires Index, vaulting him into the ranks of the world’s richest people.

In a statement, a spokesperson said OpenAI remains “focused on building AI that benefits everyone,” adding, “the nonprofit is core to our mission and will continue to exist.”

The possible equity holding, which is still under negotiation and could change or not materialize, would give Altman an ongoing financial stake in the success of OpenAI. Many investors favor the idea of a founder owning at least part of the businesses they run. Altman has also occasionally said in interviews that he wished he had taken equity so that people would stop asking him about it. Reuters earlier reported on OpenAI’s plan to restructure and give Altman equity for the first time.

Altman said the executive departures were not related to the restructuring. “I saw some stuff that this was related to a restructure, that’s totally not true,” Altman said on stage at the Italian Tech Week in Turin on Thursday. “This is just about people being ready for new chapters in their lives.”

In a statement on X, Murati said she was “stepping away because I want to create the time and space to do my own exploration.” In response, Altman expressed “tremendous gratitude” for Murati’s contributions, writing, “It’s hard to overstate how much Mira has meant to OpenAI, our mission, and to us all personally.” He also said that he would share more with employees about transition plans soon.

Murati does not yet have a exit date at the company, according to a person familiar with the matter. She is still speaking with OpenAI’s leadership about plans for her replacement, including the timeline. In the post, she wrote, “For now, my primary focus is doing everything in my power to ensure a smooth transition, maintaining the momentum we’ve built.”

Representatives for OpenAI and Murati declined to provide further comment.

On Wednesday, many employees were shocked by the announcement of Murati’s departure. On the company’s internal Slack channel, multiple OpenAI employees responded to the news with a “WTF” emoji, according to a person familiar with the matter.

Murati, an Albanian-born Dartmouth-educated engineer, played a key role in shepherding major product releases, including OpenAI’s popular ChatGPT chatbot, its DALL-E image generation software, and its recently released advanced voice mode that lets users talk to ChatGPT in essentially real time.

This spring, Murati came under fire for saying in an interview with the Wall Street Journal that she wasn’t sure whether Sora, a text-to-video generator that OpenAI has showed off but not yet released, was trained on user-generated videos from YouTube, Facebook and Instagram. Such a use of YouTube content would be an infraction of the platform’s terms of service, YouTube CEO Neal Mohan later told Bloomberg.

After Altman’s ouster, Murati gained a higher profile when she was appointed as interim CEO—but she quickly joined a group of executives pushing for Altman to be reinstated.

Her departure marks the latest executive exit at OpenAI since Altman’s firing and rehiring last year. Ilya Sutskever, the company’s chief scientist, left in May. In August, co-founder Greg Brockman said he would go on leave until the end of the year and researcher John Schulman left for AI rival Anthropic. The departures leave only two members of OpenAI’s original founding team at the startup: Altman and Wojciech Zaremba.

In her post on X, the text of which she earlier sent to employees at the company, Murati said she was grateful to have worked with the OpenAI team. “Together we’ve pushed the boundaries of scientific understanding in our quest to improve human well-being,” she wrote.

The company currently has about 1,700 employees, more than double the roughly 770 it had in late 2023.

Altman subsequently announced additional changes to OpenAI’s management. In a memo to OpenAI he also posted to X on Wednesday, he wrote that Chief Research Officer Bob McGrew is leaving, along with Barret Zoph, a vice president of research who worked on products like ChatGPT.

In his own post on X, Zoph said it was a “very difficult decision” to leave and he plans to “explore new opportunities” outside the company.

“OpenAI is doing and will continue to do incredible work and I am very optimistic about the future trajectory of the company and will be rooting everybody on,” he wrote.

Altman also named six existing employees who will now report directly to him, some in new roles, including Matt Knight as chief information security officer.

“I have over the past year or so spent most of my time on the non-technical parts of our organization; I am now looking forward to spending most of my time on the technical and product parts of the company,” the CEO wrote, adding that there will be an all-hands meeting Thursday to answer employee questions.

“Leadership changes are a natural part of companies, especially companies that grow so quickly and are so demanding,” Altman wrote. “I obviously won’t pretend it’s natural for this one to be so abrupt, but we are not a normal company.”

2024 Bloomberg L.P. Distributed by Tribune Content Agency, LLC.

Federal regulators who say Google holds an illegal monopoly over the technology that matches online advertisers to publishers are vastly underestimating the competition the tech giant faces, an expert hired by Google testified Thursday.

Mark Israel, an economist who prepared an expert report on Google’s behalf, said the government’s claims that Google holds a monopoly over advertising technology are improperly focused on a narrow market the government defines as “open web display advertising,” essentially the rectangular ads that appear on the top and along the right hand side of a web page when a consumer browses the web on a desktop computer.

But the government’s case fails to account for a variety of competition that occurs beyond those rectangular boxes, Israel said. In the real world, advertisers have dramatically shifted where they spend money to social media companies like Facebook and TikTok, and online retailers like Amazon.

When you account for all online display advertising, not just the narrow segment defined by the government’s case, Google gets just 10% of the U.S. market share as of 2022, he said. That’s down from roughly 15% a decade ago.

In addition, advertisers have moved away from placing their ads on the screens of desktop and laptop computers where Google is alleged to control the market, with money migrating to ads placed on apps and mobile device screens. Israel cited marketing data showing display ad spending on desktop and laptop devices has decreased from 71% in 2013 to 17% in 2022.

The government’s case “seems to miss where the competition is today,” Israel said.

His testimony comes as Google wraps up its defense in the third week of an antitrust trial that began earlier this month in Alexandria, Virginia. U.S. District Judge Leonie Brinkema has said she expects the government will put on a short rebuttal case Friday. Then the trial will go on hiatus, with both sides submitting proposed findings of fact in November and returning to court to make closing arguments in December. She said she expects to make a ruling by the end of the year.

The government’s case alleges Google has built and maintained an illegal monopoly that restricts choices and inflates costs for online publishers and advertisers. Its control of the market has allowed Google to keep 36 cents on the dollar for every ad bought and sold through its ad tech stack, the government claims.

The government says Google controls advertising tech at every step of the process, including the predominant technology used by publishers to sell their ad space, the predominant technology used by advertisers looking to purchase ad space, and the ad exchanges in the middle that conduct auctions in a matter of milliseconds to match advertiser to publisher.

The government’s case contends that Google illegally ties those markets together, forcing publishers to use Google’s technology if they want access to Google’s large cache of advertisers.

The government, using more narrow market definitions than those used by Israel, has claimed that Google controls 91% of the market for publisher ad servers and 87% of the market for advertising ad networks.

Google says the government’s case also fails to account for the billions the company has invested to ensure its products, working together, generate better value for publishers and advertisers by matching the right advertisers to the right consumers.

Israel cited data showing publishers working with Google are generating more revenue for each bit of ad space they make available, while advertisers are paying less for each click their ads generate.

That only occurs, Israel said, because Google’s technology is continually improving the quality of the ads by matching advertisers to consumers based on their interests and purchase history.

Israel also disputed the government’s claims that Google gets 36 cents on the dollar for the ad sales it facilitates. He said data shows that percentage has dropped to 31% or 32% in recent years. More importantly, he said, competitors have even higher take rates, with an industry average of 42 cents on the dollar.

The Virginia trial is separate from another case brought by the government alleging that Google’s ubiquitous search engine constitutes an illegal monopoly. In that case, a judge in the district of Columbia ruled in favor of the government and declared the search engine a monopoly, but no decision has yet been made on any potential remedies. The government is scheduled to offer suggestions of proposed remedies next month. those could include restricting Google from paying tech companies to lock in Google as the default search engine for gadgets like cellphones, or even seeking to force google to sell off parts of its business.

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The US National Transportation Safety Board (NTSB) on Thursday issued “urgent safety recommendations” regarding the rudder systems on certain Boeing 737 aircraft, highlighting a risk of jamming.

It came after a February 6 incident involving a Boeing 737 MAX 8 operated by United Airlines, whose rudder pedals were “stuck” in the neutral position while on the tarmac after landing at Newark airport in New Jersey.

None of the 155 passengers and six crew members were hurt, the NTSB said, with the captain using the nose landing gear controls to steer the plane.

Boeing has come under increasing pressure following a number of safety incidents involving its aircraft. It did not immediately respond to an AFP request for comment.

The cause of the February incident was found to be the rollout guidance actuator, one of the rudder control components, with tests revealing it was susceptible to moisture which could “freeze and limit rudder system movement,” the NTSB said.

The faulty actuator was manufactured by US company Collins Aerospace, it added.

“Collins notified Boeing that more than 353 actuators that Collins had delivered to Boeing since February 2017 were affected by this condition,” the NTSB said.

The part is installed in the tail of some Boeing 737 NG and 737 MAX airplanes.

The Federal Aviation Authority said it would convene a corrective action review board on Friday based on the NTSB’s recommendations to determine next steps.

Boeing has been under close regulator scrutiny since an in-flight incident involving an Alaska Airlines 737 MAX 9 aircraft in early January.

That event saw a door plug blow out mid-flight, leaving a hole in the side of the aircraft.

Boeing’s quality control and production processes had already been called into question after the crashes of two 737 MAX aircraft in 2018 and 2019, killing 346 people.

In March, the US aviation giant reshuffled its leadership, with new boss Kelly Ortberg taking over on August 8.

Ortberg had headed Rockwell Collins, the company which later became Collins Aerospace, from 2013 to 2018.

© 2024 AFP