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Turbulence at OpenAI: Legal Reflections on a Surprising Dismissal and Reinstatement

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Renato Bessa

5 Min
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Legal

Turbulence at OpenAI: Legal Reflections on a Surprising Dismissal and Reinstatement

In the last weeks of November 2023, the world of artificial intelligence was shaken by an unexpected event: the dismissal and reinstatement of Sam Altman, CEO of OpenAI. This abrupt move, decided by a small group of board members, shocked the technology world. For those unaware, OpenAI, the company behind the ChatGPT, an artificial intelligence system launched in November 2022, took the world by storm within weeks.

Coincidentally, as I was reflecting on legal issues and their application as presented in the notable work 'Dictionary of Hermeneutics' by Lênio Streck (2018), I encountered the case of OpenAI. This event highlights important aspects of law, corporate governance, and business ethics. In a sector driven by disruptive innovations, the OpenAI episode underscores the volatility and significant consequences of decisions made by leaders of influential organizations.

Today, with the advancement of artificial intelligence, a common question arises: will AI replace lawyers and judges? This article, in a very simplistic and thoughtful manner, without any intention of discussing foreign or Brazilian Business Law, or delving into the merits of everything that happened in the OpenAI episode, argues that, despite technological transformations important in various fields of knowledge, the fundamental issues of law, particularly hermeneutics and the application of law, remain unique and should resist 'algorithmization', as they are essentially 'analog'.

Following the developments of the case, an article published in WIRED (Dave, 2023) addressed the issue of OpenAI's 'bizarre' corporate structure, which started as a non-profit organization but formed a for-profit subsidiary in 2019, granting four people the power to dismiss CEO Sam Altman. At this point, we can raise several questions. With this statutory provision allowing the board members to dismiss the CEO, is it an isolated text? Doesn't its understanding depend on the context? Would the dismissal require any substantial justification? Is the mere justification that "He was not consistently honest in his communications with the board." sufficient? Should the interpretation of such a provision observe legal principles and tradition? Can one abuse their right, or should it be exercised within the limits of objective good faith? Does a provision that says the board can dismiss the CEO imply even those without whom the company itself becomes unviable?

Over the same weekend of the incident, the case took additional notable turns. Microsoft, in a strategic move, announced the hiring of Sam Altman, which was highlighted as a significant market movement. This action, in theory, would allow Microsoft to acquire a highly competent artificial intelligence management team without necessarily buying OpenAI, valued at 86 billion dollars. The situation was further exacerbated by the fact that other OpenAI employees opposed the dismissal and threatened to migrate to Microsoft along with Altman. This development raised serious questions about the future of OpenAI, its governance, and its ability to maintain leadership in the AI industry, as discussed in a 2023 article by the WIRED team.

Another interesting issue illustrates a central dilemma in contemporary corporate law of Big Techs: to whom does the asset of a technology company fundamentally depend on the knowledge and experience of its employees belong? When these individuals leave the organization, they take with them a significant portion of that value. Is this knowledge the sole property of the company? How does the company protect itself from this knowledge flight? Would an exclusivity contract, prohibiting the transfer to other companies, be effective in the face of the principle of human dignity and the right to work? How to balance the protection of a company's intellectual assets with the freedom of movement of talents in the market, when the movement is so abrupt that it can render the company itself unviable? The issue of Microsoft, which indirectly could come to acquire the company, would that acquisition be legitimate? Could we talk about eventual unjust enrichment? Should the shareholders and investors of OpenAI be compensated? And the various applications around the world that today use the OpenAI platform?

The complexity of law resides in a layer of abstraction, which often transcends the ability to be simplified into algorithms. This article sought to illustrate, through a series of pertinent questions, how complex social phenomena interact with the legal field. We highlight the relevance of applying the law in a contextualized manner, considering the specificities of each era and situation. Thus, we emphasize that, as technology advances by leaps and bounds, the law, as a condition of possibility, continues to play a crucial role, adapting and responding to the emerging challenges of our technologically advanced society. As the thinker H.L. Mencken wisely said, "For every complex problem, there is a clear, simple, and wrong answer"; the law is complex.

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