subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now
Sam Altman. Picture: AMIR COHEN
Sam Altman. Picture: AMIR COHEN

During the past couple days we’ve seen something unprecedented happen within Silicon Valley boardrooms that could well shape the direction of governance of AI companies for years to come.

The sacking of Sam Altman as CEO of OpenAI, arguably the world’s leading AI company that developed the now famous narrative AI chatbot called ChatGPT, has left many surprised that the “face of AI” would be sacked by the company he helped found.

These developments make for an interesting study into the future for corporate governance models as applied to AI companies, and also the fight between the monetary motive for innovation and innovation for social good.

OpenAI was founded on the principles of developing AI for a better tomorrow. This could be seen not only in its vision and mission, but also in the unique governance model it developed.

Being governed as a nonprofit with almost no shareholders that received monetary benefits or had the ability to appoint directors, made it unique in the typical Silicon Valley start-up landscape. Clearly the aim was not to innovate for the sake of money alone, but rather for the betterment of humankind.

This stands in stark contrast to tech giants such as Google and Microsoft, which have a large shareholder base to account to every quarter. That,  coupled with a strong competitive environment, means their boards must ensure the financial viability of their companies and consider the monetary implications of innovation.

Microsoft has announced that Altman will join as CEO in its innovation lab, so he will now further the group’s interests in the AI space. Is this perhaps a sign that innovation for a social good does not work within the typical competitive technology space we now find ourselves in? Does it mean one cannot innovate without considering the monetary implications?

Cost-benefit conundrum

OpenAI, operating on a nonprofit basis just before Altman’s sacking, had already considered the huge cost-benefit conundrum for its funders and developed a subsidiary that would allow some financial benefits to accrue to investors to compensate them for the capital invested.

Strategic direction, however, would still be steered by the nonprofit board. In other words, they had already abandoned the idea of innovation for a better tomorrow and considered the capital scenario they faced. That might not have sat well with a board operating on a nonprofit basis.   

The board claims that among the reasons for sacking Altman was a lack of transparency in his dealings with them. A key tenet of good corporate governance is transparency.

With the company facing much public scrutiny it would most certainly need a high level of transparency in its ranks, especially from the CEO. The board was thus correct to consider that an aggravating factor in its relationship with the CEO.

Having brought the company much publicity at a Senate hearing on AI and its implications for humankind, Altman called for a combined effort from policymakers and innovators to map a path AI.

He was clearly well aware of the company’s mission and how AI should be positioned for the greater good. But words alone do not build credibility, and ultimately Altman’s actions spoke louder his words.

What does this mean for corporate governance of AI companies and the monetary forces? Good old corporate governance won at the end of the day through Altman’s sacking, as the company's strategic direction had veered off course, and the lack of transparency was not conducive to a functioning relationship.

It also means that in a digital future the monetary implications for innovation will always need to be considered a priority to ensure the sustainability of any project, as shown by the restructured business model of OpenAI and ultimately tacitly implied by Altman’s appointment at Microsoft.

Villet is a bachelor of accounting honours student at Stellenbosch University undertaking research into 4IR governance.

subscribe Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Subscribe now

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.