They invested $3B of capital and $7B worth of compute credits from Azure. In almost all cases an investment of 1/100th of that magnitude would earn a board seat, but OpenAI’s nonprofit structure needs to maintain a strong sense of independence to align with their charter.
Technically speaking the same Board of Directors is represented 4 times within that hierarchy, including the entity Microsoft is invested in which is one of the two entities that have investors in them and which still have a fiduciary duty to their shareholders, even as subsidiaries of the non-profit.
That’s where a lot of Microsoft’s leverage lies if it came down to a lawsuit over the last couple of weeks. If Microsoft wants a board seat, they’re going to get a board seat one way or another.
What fiduciary duties? The purple box on every investment and employment agreement states in no uncertain terms that the for-profit org is completely subordinate to the non-profit. IIRC it specifically states they don’t have any obligation to attempt to return money to investors.
10 comments
[ 2.6 ms ] story [ 37.4 ms ] threadThat’s where a lot of Microsoft’s leverage lies if it came down to a lawsuit over the last couple of weeks. If Microsoft wants a board seat, they’re going to get a board seat one way or another.