OpenAI on Friday announced its new board and the wrap-up of an internal investigation by U.S. law firm WilmerHale into the events leading up to OpenAI CEO Sam Altman’s ouster.
Sam Altman will also rejoin OpenAI’s board.
The new board members are:
Dr. Sue Desmond-Hellmann, former CEO of the Bill and Melinda Gates Foundation, who is also on the Board of Directors at Pfizer and on the President’s Council of Advisors on Science and Technology.
Nicole Seligman, former EVP and Global General Counsel of Sony and President of Sony Entertainment, who is also on the Board of Directors at Paramount Global, Meira GTx and Intuitive Machines, Inc.
Fidji Simo, CEO and Chair of Instacart, who is also on the Board of Directors at Shopify.
The three new members will “work closely with current board members Adam D’Angelo, Larry Summers and Bret Taylor as well as Greg, Sam, and OpenAI’s senior management,” according to a release.
OpenAI will continue to expand the board moving forward, according to a Zoom call with reporters.
OpenAI did not publish the investigation report but provided a summary of the findings.
“The review concluded there was a significant breakdown of trust between the prior board and Sam and Greg,” Taylor said, adding that the review also “concluded the board acted in good faith… [and] did not anticipate some of the instability that led afterwards.”
Taylor also said the board’s concerns did not arise regarding concerns over product safety and security, OpenAI’s finances or statements to customers or business partners, that it was “simply a breakdown in trust between the board and Mr. Altman.”
WilmerHale’s investigation began in December, and the lawyers submitted their report today, which included dozens of interviews with OpenAI’s prior board members and advisors, current executives and other witnesses. The investigation also involved reviewing more than 30,000 documents, according to a release.
“We have unanimously concluded that Sam and Greg are the right leaders for OpenAI,” Bret Taylor, chair of OpenAI’s board, said in a release.
“I am very grateful to Bret and Larry and WilmerHale,” Altman said on the Zoom call with reporters. He added, speaking of CTO Mira Murati, “Mira in particular is incremental to OpenAI all the time … but through that period in November, she has done an amazing job helping to lead the company.”
He added that he is “excited to be moving forward here” and for the situation to be “over.” He also mentioned he wished he had acted differently regarding differences in opinion with the board.
In November, OpenAI’s board ousted Altman, prompting resignations – or threats of resignations – including an open letter signed by virtually all of OpenAI’s employees, and uproar from investors, including Microsoft. Within a week, Altman was back at the company, and board members Helen Toner, Tasha McCauley and Ilya Sutskever, who had voted to oust Altman, were out. Adam D’Angelo, who had also voted to oust Altman, stayed on the board.
When Altman was asked about Sutskever’s status on the Zoom call with reporters, he said there were no updates to share.
“I love Ilya… I hope we work together for the rest of our careers, my career, whatever,” Altman said. “Nothing to announce today.”
After ChatGPT’s launch in November 2022, it broke records at the time as the fastest-growing consumer app in history, and now has about 100 million weekly active users, along with more than 92% of Fortune 500 companies using the platform, according to OpenAI. Last year, Microsoft invested an additional $10 billion in the company, making it the biggest AI investment of the year, according to PitchBook, and OpenAI has reportedly closed a deal that will allow employees to sell shares at an $86 billion valuation, though the deal reportedly took longer to close than expected due to the events surrounding Altman’s ouster.
The rollercoaster couple of weeks at the company are still affecting it months later.
This month, billionaire tech magnate Elon Musk sued OpenAI co-founders Sam Altman and Greg Brockman for breach of contract and breach of fiduciary duty, court filings revealed on Thursday.
In his complaint, Musk and his attorneys allege that the ChatGPT maker “has been transformed into a closed-source de facto subsidiary of the largest technology company in the world: Microsoft.” They also argue that this arrangement goes against a founding agreement and 2015 certification of incorporation that OpenAI established with Musk, who was a pivotal donor to a cofounder of OpenAI in its early years.
As part of Microsoft’s contract with OpenAI, the tech giant only has rights to OpenAI’s “pre-AGI” technology, and it is up to OpenAI’s board to determine whether the company has reached that milestone. Musk argued in his filing that since the OpenAI board shuffle in November – when Toner, McCauley and Sutskever were removed – the new board is “ill-equipped” to independently determine whether OpenAI has reached AGI and therefore whether its technology is outside the scope of the exclusivity deal with Microsoft.
Lawyers told CNBC that they had doubts about the legal viability of Musk’s case, and OpenAI has said it plans to file a motion to dismiss all of Musk’s claims.
In response to the high-profile lawsuit, OpenAI reproduced old emails from Musk in which the Tesla and SpaceX CEO encouraged the rising startup to raise at least $1 billion in funding, and agreed that it should “start being less open” over time and “not share” the company’s science with the public.
Musk’s lawsuit also follows some controversy over Altman’s previous chip endeavors and investments.
Just before Altman’s brief ouster, he was reportedly seeking billions for a new and not-yet-formed chip venture code-named “Tigris” to eventually compete with Nvidia, traveling to the Middle East to raise money from investors.
In 2018, Altman personally invested in an AI chip startup called Rain Neuromorphics, based near OpenAI’s San Francisco headquarters, and in 2019, OpenAI signed a letter of intent to spend $51 million on Rain’s chips. In December, the U.S. compelled a Saudi Aramco-backed venture capital firm to sell its shares in Rain.
Lemon8, a photo-sharing app by Bytedance, and RedNote, a Shanghai-based content-sharing platform, have seen a surge in popularity in the U.S. as “TikTok refugees” migrate to alternative platforms ahead of a potential ban.
Now a law that could see TikTok shut down in the U.S. threatens to ensnare these Chinese social media apps, and others gaining traction as TikTok-alternatives, legal experts say.
As of Wednesday, RedNote — known as Xiaohongshu in China — was the top free app on the U.S. iOS store, with Lemon8 taking the second spot.
While the legislation explicitly names TikTok and ByteDance, experts say its scope is broad and could open the door for Washington to target additional Chinese apps.
“Chinese social media apps, including Lemon8 and RedNote, could also end up being banned under this law,” Tobin Marcus, head of U.S. policy and politics at New York-based research firm Wolfe Research, told CNBC.
If the TikTok ban is upheld, it will be unlikely that the law will allow potential replacements to originate from China without some form of divestiture, experts told CNBC.
PAFACA automatically applies to Lemon8 as it’s a subsidiary of ByteDance, while RedNote could fall under the law if its monthly average user base in the U.S. continues to grow, said Marcus.
The legislation prohibits distributing, maintaining, or providing internet hosting services to any “foreign adversary controlled application.”
These applications include those connected to ByteDance or TikTok or a social media company that is controlled by a “foreign adversary” and has been determined to present a significant threat to national security.
The wording of the legislation is “quite expansive” and would give incoming president Donald Trump room to decide which entities constitute a significant threat to national security, said Carl Tobias, Williams Chair in Law at the University of Richmond.
Xiaomeng Lu, Director of Geo‑technology at political risk consultancy Eurasia Group, told CNBC that the law will likely prevail, even if its implementation and enforcement are delayed. Regardless, she expects Chinese apps in the U.S. will continue to be the subject of increased regulatory action moving forward.
“The TikTok case has set a new precedent for Chinese apps to get targeted and potentially shut down,” Lu said.
The fate of TikTok rests with Supreme Court after the platform and its parent company filed a suit against the U.S. government, saying that invoking PAFACA violated constitutional protections of free speech.
TikTok’s argument is that the law is unconstitutional as applied to them specifically, not that it is unconstitutional per se, said Cornell Law Professor Gautam Hans. “So, regardless of whether TikTok wins or loses, the law could still potentially be applied to other companies,” he said.
The law’s defined purview is broad enough that it could be applied to a variety of Chinese apps deemed to be a national security threat, beyond traditional social media apps in the mold of TikTok, Hans said.
Trump, meanwhile, has urged the U.S. Supreme Court to hold off on implementing PAFACA so he can pursue a “political resolution” after taking office. Democratic lawmakers have also urged Congress and President Joe Biden to extend the Jan. 19 deadline.
Synthesia is a platform that lets users create AI-generated clips with human avatars that can speak in multiple languages.
Synthesia
LONDON — Synthesia, a video platform that uses artificial intelligence to generate clips featuring multilingual human avatars, has raised $180 million in an investment round valuing the startup at $2.1 billion.
That’s more than than double the $1 billion Synthesia was worth in its last financing in 2023.
The London-based startup said Wednesday that the funding round was led by venture firm NEA with participation from Atlassian Ventures, World Innovation Lab and PSP Growth.
NEA counts Uber and TikTok parent company ByteDance among its portfolio companies. Synthesia is also backed by chip giant Nvidia.
Victor Riparbelli, CEO of Synthesia, told CNBC that investors appraised the businesses differently from other companies in the space due to its focus on “utility.”
“Of course, the hype cycle is beneficial to us,” Riparbelli said in an interview. “For us, what’s important is building an actually good business.”
Synthesia isn’t “dependent” on venture capital — as opposed to companies like OpenAI, Anthropic and Mistral, Riparbelli added.
These startups have raised billions of dollars at eye-watering valuations while burning through sizable amounts of money to train and develop their foundational AI models.
Read more CNBC reporting on AI
Synthesia’s not the only startup shaking up the world of video production with AI. Other startups offer solutions for producing and editing video content with AI, like Veed.io and Runway.
Meanwhile, the likes of OpenAI and Adobe have also developed generative AI tools for video creation.
Eric Liaw, a London-based partner at VC firm IVP, told CNBC that companies at the application layer of AI haven’t garnered as much investor hype as firms in the infrastructure layer.
“The amount of money that the application layer companies need to raise isn’t as large — and therefore the valuations aren’t necessarily as eye popping” as companies like Nvidia,” Liaw told CNBC last month.
Riparbelli said that money raised from the latest financing round would be used to invest in “more of the same,” furthering product development and investing more into security and compliance.
Last year, Synthesia made a series of updates to its platform, including the ability to produce AI avatars using a laptop webcam or phone, full-body avatars with arms and hands and a screen recording tool that has an AI avatar guide users through what they’re viewing.
On the AI safety front, in October Synthesia conducted a public red team test for risks around online harms, which demonstrated how the firm’s compliance controls counter attempts to create non-consensual deepfakes of people or use its avatars to encourage suicide, adult content or gambling.
The National Institute of Standards and Technology test was led by Rumman Chowdhury, a renowned data scientist who was formerly head of AI ethics at Twitter — before it became known as X under Elon Musk.
Riparbelli said that Synthesia is seeing increased interest from large enterprise customers, particularly in the U.S., thanks to its focus on security and compliance.
More than half of Synthesia’s annual revenue now comes from customers in the U.S., while Europe accounts for almost half.
Synthesia has also been ramping up hiring. The company recently tapped former Amazon executive Peter Hill as its chief technology officer. The company now employs over 400 people globally.
U.K. Technology Minister Peter Kyle said the investment “showcases the confidence investors have in British tech” and “highlights the global leadership of U.K.-based companies in pioneering generative AI innovations.”
The SEC filed a lawsuit against Elon Musk on Tuesday, alleging the billionaire committed securities fraud in 2022 by failing to disclose his ownership in Twitter and buying shares at “artificially low prices.”
Musk, who is also CEO of Tesla and SpaceX, purchased Twitter for $44 billion, later changing the name of the social network to X. Prior to the acquisition he’d built up a position in the company of greater than 5%, which would’ve required disclosing his holding to the public.
According to the SEC complaint, filed in U.S. District Court in Washington, D.C., Musk withheld that material information, “allowing him to underpay by at least $150 million for shares he purchased after his financial beneficial ownership report was due.”
The SEC had been investigating whether Musk, or anyone else working with him, committed securities fraud in 2022 as the Tesla CEO sold shares in his car company and shored up his stake in Twitter ahead of his leveraged buyout. Musk said in a post on X last month that the SEC issued a “settlement demand,” pressuring him to agree to a deal including a fine within 48 hours or “face charges on numerous counts” regarding the purchase of shares.
Musk’s lawyer, Alex Spiro, said in an emailed statement that the action is an admission by the SEC that “they cannot bring an actual case.” He added that Musk “has done nothing wrong” and called the suit a “sham” and the result of a “multi-year campaign of harassment,” culminating in a “single-count ticky tak complaint.”
Musk is just a week away from having a potentially influential role in government, as President-elect Donald Trump’s second term begins on Jan. 20. Musk, who was a major financial backer of Trump in the latter stages of the campaign, is poised to lead an advisory group that will focus in part on reducing regulations, including those that affect Musk’s various companies.
In July, Trump vowed to fire SEC chairman Gary Gensler. After Trump’s election victory, Gensler announced that he would be resigning from his post instead.
In a separate civil lawsuit concerning the Twitter deal, the Oklahoma Firefighters Pension and Retirement System sued Musk, accusing him of deliberately concealing his progressive investments in the social network and intent to buy the company. The pension fund’s attorneys argued that Musk, by failing to clearly disclose his investments, had influenced other shareholders’ decisions and put them at a disadvantage.
The SEC said that Musk crossed the 5% ownership threshold in March 2022 and would have been required to disclose his holdings by March 24.
“On April 4, 2022, eleven days after a report was due, Musk finally publicly disclosed his beneficial ownership in a report with the SEC, disclosing that he had acquired over nine percent of Twitter’s outstanding stock,” the complaint says. “That day, Twitter’s stock price increased more than 27% over its previous day’s closing price.”
The SEC alleges that Musk spent over $500 million purchasing more Twitter shares during the time between the required disclosure and the day of his actual filing. That enabled him to buy stock from the “unsuspecting public at artificially low prices,” the complaint says. He “underpaid” Twitter shareholders by over $150 million during that period, according to the SEC.
In the complaint, the SEC is seeking a jury trial and asks that Musk be forced to “pay disgorgement of his unjust enrichment” as well as a civil penalty.
