Sam Altman’s ouster leaves OpenAI, Microsoft employees ‘completely shocked,’ insiders say

• OpenAI co-founder and CEO Sam Altman was forced out of the company Friday.
• The move came as a complete surprise to people inside the company and Microsoft, a major investor.
• OpenAI held a brief meeting where the public statement was reiterated and calm was encouraged.

Microsoft executives were given only a few minutes’ notice before the announcement that Sam Altman, co-founder and CEO of OpenAI and one of Microsoft’s largest investments, would be leaving the company on Friday afternoon. They were the fortunate ones.

Employees at OpenAI found out before the rest of the tech world. The company issued a harshly worded statement shortly after 12:30 p.m. pacific time, announcing that Altman was out and that its CTO, Mira Murati, was immediately replacing him on an interim basis.

Employees at OpenAI and Microsoft were “completely shocked,” according to sources inside both companies. A brief meeting was held at OpenAI’s San Francisco headquarters, during which the public statement was reiterated and calm was encouraged.

People at the company were relieved that Ilya Sutskever, OpenAI’s chief scientist, co-founder, and board member, was still with them. He’s been a respected leader at the company for years and has been “in charge” of the tech work for some time, according to the OpenAI employee.

The acceptance was fleeting. About an hour later, OpenAI co-founder and president Greg Brockman announced that he had “quit” over Altman’s dismissal. In an email to staff, which was also posted to X, he stated that he did so “based on today’s news.” According to the company’s statement, Brockman was previously removed as chairman of OpenAI.

One AI expert, who does not work at OpenAI but knows many of its employees, called the abrupt executive shakeup “one for the history books.” He compared Altman’s firing to Steve Jobs’ firing from Apple in 1985 after a disagreement with the company’s then-CEO.

Those within OpenAI and Microsoft agreed that the move was unexpected. Microsoft, on the other hand, says it supports its partner’s new CEO. “We have a long-term agreement with OpenAI that provides us with complete access to everything we need to deliver on our innovation agenda and exciting product roadmap; and we remain committed to our partnership, as well as Mira and the team.” “Together, we will continue to bring the world the significant benefits of this technology,” Microsoft CEO Satya Nadella said in a statement.

One Microsoft employee told BI that there were signs that all was not well with OpenAI’s business, which Microsoft has reportedly backed to the tune of at least $10 billion.

“I think its valuation is enormous, and there’s some good stuff happening around AI, but the reality is the economics here are you need to charge $30+ for AI features to handle the underlying infrastructure costs, which is like double or more whatever people currently pay for a productivity tool,” the staff member at Microsoft said.

“OpenAI is also going to continually need to spend billions training the models, on top of the inferencing cost,” a source said.

A request for comment from OpenAI was not immediately responded to.

“As you saw at Microsoft Ignite this week, we’re continuing to rapidly innovate for this era of AI, with over 100 announcements across the full tech stack from AI systems, models, and tools in Azure to Copilot,” Nadella said in a statement. Most importantly, we are dedicated to providing all of this to our customers while also planning for the future.”