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Corporate Governance Lessons from the OpenAI Controversy

Jan 26, 2024 - clsbluesky.law.columbia.edu
The article discusses the governance lessons that can be learned from the controversy surrounding artificial intelligence company OpenAI, Inc. The company, initially formed as a tax-exempt organization with the goal of creating safe and beneficial AI for humanity, later restructured to include non-tax-exempt subsidiaries to attract investment. This led to tension over the competing goals of altruism, safety, research, and profit-making. The controversy offers governance lessons including the importance of board authority, oversight of the CEO, clarity in decision-making, risk monitoring, workforce culture, the limits of altruism, avoiding mission confusion, and understanding the corporate structure.

The OpenAI saga combines the complexity of AI with corporate governance principles, potentially affecting the nature of board/CEO relationships and future regulation of AI technology. The controversy offers a unique governance lesson for corporate leadership and entrepreneurs, especially those that seek to combine altruistic and investment objectives. The article concludes by noting that the results of an independent counsel review commissioned by the restructured AI board may provide further insight into the controversy.

Key takeaways:

  • The OpenAI controversy offers valuable governance lessons for corporate boards, including those relating to mission restrictions, corporate structure selection, the board/management dynamic, risk oversight, and workforce culture.
  • OpenAI's reorganization under CEO Sam Altman, which included the addition of non-tax-exempt subsidiaries, led to tension among leadership over the competing goals of altruism, safety, research, and profitmaking.
  • The controversy surrounding OpenAI serves as a reminder that it is the board, not the CEO, which is responsible by law for the conduct of the business, and that the CEO acts as the board’s delegate.
  • The OpenAI saga could affect the nature of board/CEO relationships and ultimately affect future regulation of AI technology, offering a unique governance lesson for corporate leadership and entrepreneurs in technology-related enterprises.
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