Updated with continuing uncertainty:

The unprecedented drama at OpenAI continues today as 49% investor Microsoft Corp. put its big feet down and hired former Chief Executive Sam Altman and co-founder and former President Greg Brockman for a new artificial intelligence research group at Microsoft.

The move comes as more than 500 of OpenAI’s 770-person staff — and the New York Times now says it’s 700 — including former interim CEO Mira Murati, signed a letter to OpenAI’s board threatening to quit unless the board resigns and Altman (pictured, left) and Brockman are reinstated.

“The mission continues,” Altman posted on X.

Update: Indeed, a later report from The Verge today said Altman and Brockman are still open to returning to OpenAI if the board members who dumped him step down. And in an interview with CNBC Monday afternoon, Microsoft CEO Satya Nadella (right) appeared to waffle a bit on where Altman and others would end up, saying he’s “open to both options.”

Even Chief Scientist Ilya Sutskever, who was reportedly the spark behind the board’s decision Friday to fire Altman — whom the board in its Friday statement said had been “not consistently candid” in its communications with the board — appeared to reverse course. “I deeply regret my participation in the board’s actions,” he wrote on X. “I never intended to harm OpenAI. I love everything we’ve built together and I will do everything I can to reunite the company.”

The development caps, but likely does not end, a whirlwind weekend that began Friday when OpenAI’s board fired Altman, the public face of OpenAI and by extension the entire generative AI explosion since OpenAI released its ChatGPT chatbot only a year ago. The clash with the board and Sutskever reportedly stemmed from what they and some researchers felt was overly rapid commercialization that could result in the technology causing harm.

Nadella said Altman will be CEO of the new AI group. “We’ve learned a lot over the years about how to give founders and innovators space to build independent identities and cultures within Microsoft, including GitHub, Mojang Studios, and LinkedIn, and I’m looking forward to having you do the same.”

Nadella said Altman and Brockman will be joined by “colleagues” — including Jakub Pachocki, the company’s director of research; Aleksander Madry, head of a team evaluating potential risks from AI; and Szymon Sidor, a seven-year researcher at the startup — and “more” to come, Brockman said in a post on X. According to a letter from the more than 500 staffers threatening to quit, Microsoft has offered jobs to all OpenAI employees. Many of them posted on X this morning: “OpenAI is nothing without its people.”

“We look forward to moving quickly to provide them with the resources needed for their success,” said Nadella. For his part, Brockman added in a post that the research team will build “something new & it will be incredible.”

Nadella, who reportedly was shocked and angry at the OpenAI board’s move, so far has managed some adroit footwork. The company’s stock had fallen Friday after the initial news and was expected to fall further Monday without a satisfactory resolution. In morning trading today, its shares were up a fraction of a point, indicating Nadella had taken control of the situation — at least so far.

Even more important, Nadella, who said Microsoft remains committed to OpenAI, in which it has pledged to invest more than $10 billion and with which it has a broad technology exchange deal, remains in the driver’s seat on generative AI.

Nonetheless, OpenAI’s four-person board doubled down, at least for now, apparently secure in the knowledge that they control the nonprofit entity that in turn controls the for-profit unit of OpenAI. They appointed another interim CEO, Twitch co-founder Emmet Shear and released a memo Sunday evening defending their actions, according to the New York Times.

“The board firmly stands by its decision as the only path to advance and defend the mission of OpenAI,” the memo read. It reportedly was signed by each of the four directors, Adam D’Angelo, Helen Toner, Sutskever and Tasha McCauley. “Put simply, Sam’s behavior and lack of transparency in his interactions with the board undermined the board’s ability to effectively supervise the company in the manner it was mandated to do.”

However, Shear himself wrote on X early this morning that he plans to “hire an independent investigator to dig into the entire process leading up to this point and generate a full report.” He added, “Depending on the results everything we learn from these, I will drive changes in the organization — up to and including pushing strongly for significant governance changes if necessary.”

In addition, Shear claimed the board didn’t remove Altman over any specific disagreement on safety. “Their reasoning was completely different from that,” he wrote without elaborating — leaving a continuing mystery about what sparked the board’s actions. “I’m not crazy enough to take this job without board support for commercializing our awesome models.”

It remains murky where OpenAI goes from here, since it’s not yet clear whether Nadella will prioritize the existing relationship with OpenAI or the new research unit where potentially most of OpenAI’s employee could end up. Axios’ Dan Primack suggested that it’s possible Nadella is using the new research lab as a stick to force OpenAI’s board to recant and rehire Altman and Brockman. However, he noted that would be a risky gambit, since one benefit of OpenAI to Microsoft is that the former can operate more independently and, not least, keep the heat from any AI missteps from burning Microsoft.

Meanwhile, OpenAI reportedly has been looking at raising another big round of funding, but investors are going to be very leery if it’s not clear who’s still at OpenAI. And The Information reported today that Anthropic, Google, Cohere and other AI companies are getting contacted by OpenAI customers to consider other options.

“We’re already seeing a mass exodus of the team who have made ChatGPT, and should expect further fallout over the next few days as a new AI team at Microsoft, led by Altman and Greg Brockman takes shape,” said James Clough, co-founder and chief technology officer of Robin AI. “All of this will undoubtedly distract from, and slow down product development. While this is bad news for other OpenAI investors and for customers who are locked into their platform, it will potentially give other LLM providers and a newly empowered Microsoft an unexpected opportunity to seize the market.”

Altman is also reportedly mulling the idea of starting a new AI firm alongside a number of former OpenAI employees, but it’s not clear where that effort stands.

The bottom line: It’s likely there will be more turns of the screw in coming hours, days and weeks.

Photo: Microsoft