In November the Board of Open AI an operating company backed by Microsoft sacked its chief executive, Sam Altman. He was then very quickly reinstated by Microsoft. The circumstances of this dismissal and reinstatement give rise to some intriguing governance issues.

Open AI’s function was to develop and commercialise AI products. Scientists and governments the world over now recognise the risks involved with the development of AI, specifically when an AI product crosses a threshold and becomes an independent all-powerful lifeform itself known as artificial general intelligence.

Those who defined the charter of Open AI recognised this. The statutes of the company stipulated that at the moment that the product being developed is deemed to have crossed that threshold and become artificial general intelligence, the commercial backers would cease to have any further rights over the product and, control of its development and commercialisation reverts exclusively to the board who presumably would then be expected to act in the wider public interest and possibly ‘save the world’.  

In November the board of Open AI alleged that Sam Altman was not keeping them sufficiently informed about the development of AI such that they did not feel they were able to exercise their responsibilities and they dismissed him. Microsoft then rehired him.

Ultimately, and if it goes that far, a Court would decide who in these circumstances was in the right given the constitution of the company. But what is clear is the altruistic function of the Board was in stark conflict with the commercial interests of Microsoft and its shareholders.

The point from a more general governance view is how a board balances the interests of the shareholder with the wider public good. If one looks for guidance in the Companies Act, a director (and therefore, collectively, a board) has to balance, in essence, the commercial success of the company. This involves, among other things, considering the interests of its employees, fostering good business relationships with suppliers and customers, and taking into account the impact of its operations on 'the community and the environment.'

Question: Would the latter consideration have caused your board to act in equivalent circumstances in the same way as the board of Open AI?