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OpenAI announced late Tuesday night on X that it has reached an agreement in principle for former Chief Executive Sam Altman to return to the artificial intelligence phenom, ending several days of drama.

The post said there will be a “new initial board of Bret Taylor (Chair), Larry Summers, and Adam D’Angelo. We are collaborating to figure out the details. Thank you so much for your patience through this.” A source told The Verge that this board’s only purpose is to vet and appoint a new board with up to nine people who “will reset the governance of OpenAI,” which was a central issue in the debacle. In addition, it’s likely Microsoft and Altman will have seats on that board.

For his part, Altman said on X that “i love openai, and everything i’ve done over the past few days has been in service of keeping this team and its mission together. when i decided to join msft on sun evening, it was clear that was the best path for me and the team. with the new board and w satya’s support, i’m looking forward to returning to openai, and building on our strong partnership with msft.”

Likewise former President Greg Brockman, who had quit after Altman was fired, said on X: “Returning to OpenAI & getting back to coding tonight.”

Microsoft CEO Satya Nadella issued a more corporate statement on X: “We are encouraged by the changes to the OpenAI board. We believe this is a first essential step on a path to more stable, well-informed, and effective governance. Sam, Greg, and I have talked and agreed they have a key role to play along with the OAI leadership team in ensuring OAI continues to thrive and build on its mission. We look forward to building on our strong partnership and delivering the value of this next generation of AI to our customers and partners.”

The second interim CEO, Emmett Shear, appeared relieved as well. “I am deeply pleased by this result, after ~72 very intense hours of work,” he said on X. “Coming into OpenAI, I wasn’t sure what the right path would be. This was the pathway that maximized safety alongside doing right by all stakeholders involved. I’m glad to have been a part of the solution.”

Earlier today, Altman was engaged in talks with the company’s board of directors and its interim CEO Emmett Shear over a possible reinstatement. A report by Bloomberg today cited unnamed sources as saying the discussions among Altman (pictured), Shear and at least one board member, D’Angelo, were ongoing. The talks also involved some of OpenAI’s biggest investors, which continue to push for his return.

It’s said that Altman, who just yesterday agreed to join Microsoft Corp. to head up a new AI research unit, was insisting upon returning to OpenAI as its CEO. He also wanted existing board members to step down. According to Bloomberg, one possible scenario would see Altman become a director on a transitional board, alongside former Salesforce Inc. co-CEO Bret Taylor.

Altman was fired on Friday by the board of directors of OpenAI Inc., the nonprofit that controls the for-profit subsidiary. The move blindsided many within the company, as well as its backers, and stunned the wider tech industry. In a statement, OpenAI’s board said that it “no longer has confidence in his ability to continue leading” the company, adding that it believed Altman was “not consistently candid in his communications.”

Significant development

It’s a radical turn from the weekend, when the directors had refused to speak directly with the former executive they fired, multiple sources said.

The Information reported late today that Altman had a “conflict” with board member Helen Toner, director of strategy at Georgetown’s Center for Security and Emerging Technology, and tried to get her off the board, asking other board members to help. Reports indicate that Altman was unhappy with a paper Toner wrote that praised rival Anthropic for holding back its Claude chatbot until it felt it was safe, unlike OpenAI.

Altman has some powerful allies in the shape of Microsoft, Thrive Capital, Khosla Ventures, Sequoia Capital and Tiger Global Management, which are all key financial backers of OpenAI.

Anna Makanju, OpenAI’s vice president of global affairs, reportedly sent a memo to employees on Monday saying that the company had been having “intense discussions” with the board, Altman and Shear in an effort to unify it. The message came after more than 90% of OpenAI employees signed a letter threatening to quit the firm if Altman was not brought back into the fold.

It’s said that OpenAI’s investors wanted to resolve the chaos around the company before Thanksgiving, because they didn’t want the company’s employees to head into the holidays with so much uncertainty over their jobs and its future.

OpenAI’s board came under intense scrutiny following the decision to fire Altman. In the days that followed, board members insisted that his removal was not the result of “malfeasance” or “safety.” Moreover, even Nadella, whose company is OpenAI’s biggest backer, claimed he has not yet received a satisfactory explanation for Altman’s dismissal.

Shear is also said to be in the dark over the reason for Altman’s firing. People familiar with the matter told Bloomberg that he could step down from his interim role if the board doesn’t clearly communicate to him the circumstances in which it happened.

Until Friday, the company’s board consisted of Altman, Brockman, Chief Scientist Ilya Sutskever, Quora Inc. CEO D’Angelo, tech entrepreneur Tasha McCauley and Toner. The last two now appear to be out of the picture.

Altman was represented in his talks with OpenAI’s board by Airbnb Inc. CEO Brian Chesky, while Shear is speaking on behalf of D’Angelo and the rest of the board. Taylor was said to be playing the role of a mediator.

Although Microsoft has offered Altman an alternative job, it’s believed that the company still preferred him to return to OpenAI. Such a move would improve its strategic positioning. Microsoft, which has invested billions of dollars in OpenAI, is dependent on the company’s foundational large language models, which power many of its own AI applications. The relationship serves Microsoft well, as it can distance itself from OpenAI in the event of any controversy surrounding its AI models.

Constellation Research Inc. analyst Holger Mueller said it’s hard to think of a technology company that had a more substantial lead over its rivals, only to shoot itself in the foot. The dysfunctional reality within OpenAI has now been fully exposed, and it will be lucky to recover its prestige, he said.

“The best outcome for OpenAI’s customers, partners and employees is for Altman to return, but even if he does, it remains to be seen if the company can recover and get back to work, or if the infighting will continue,” Mueller said. “As this drags on, enterprises and partners are now rightfully looking at alternatives to OpenAI, and that is a good trend for generative AI overall.”

Employee exodus?

In the meantime, vultures were circling in case OpenAI is unable to resolve the situation, looking to help themselves to its top employees. Both Microsoft and Salesforce have made job offers to anyone who desires to leave OpenAI.

In a post on X, formerly Twitter, Microsoft Chief Technology Officer Kevin Scott responded to the open letter signed by OpenAI employees: “To my partners at OpenAI: We have seen your petition and appreciate your desire potentially to join Sam Altman at Microsoft’s new AI Research Lab. Know that if needed, you have a role at Microsoft that matches your compensation and advances our collective mission.”

Salesforce CEO Marc Benioff also made an offer, saying his company would be happy to match the salary and equity of any OpenAI researcher who has tendered their resignation. He said they would be given positions on Salesforce’s Einstein Trusted AI research team.

If the new agreement holds, however, all that will be moot. As erstwhile board member Helen Toner put it: “And now, we all get some sleep.”

With reporting from Robert Hof

Photo: TechCrunch/Flickr