OpenAI solidified its position as the most valuable artificial intelligence company in 2024, navigating a tumultuous year marked by dramatic leadership changes, historic funding rounds, and significant legal challenges. The year began with the company still recovering from CEO Sam Altman’s brief ouster in November 2023, an event employees now refer to as “The Blip.” Altman was quickly reinstated with a new board of directors, and by March, he had officially rejoined the board alongside three new female members.
The company achieved remarkable financial milestones throughout the year. In February, OpenAI reached an $80 billion valuation through a tender offer that allowed employees to cash out shares—triple its previous valuation. This was followed by an even more impressive achievement in October when OpenAI raised $6.6 billion in the largest funding round in Silicon Valley history, valuing the company at $157 billion. The round was led by Thrive Capital with participation from major investors including SoftBank, Tiger Global, Microsoft, and Nvidia.
A pivotal strategic shift came in September when OpenAI announced plans to transition from its nonprofit origins to a for-profit structure over the next two years. Founded as a nonprofit in 2015, this transformation involves giving investors equity stakes and securing government approvals, though it has drawn criticism from figures like Elon Musk and Meta CEO Mark Zuckerberg.
Legal battles dominated much of 2024, particularly with co-founder Elon Musk, who sued OpenAI and Altman in February, alleging the company had become “a closed-source de facto subsidiary” of Microsoft, violating its nonprofit mission. After withdrawing the suit in June, Musk filed again in August and expanded it in November to include Microsoft as a defendant, claiming monopolistic practices. Additionally, OpenAI faced lawsuits from major newspapers including The New York Times over training data usage.
The company experienced significant talent exodus, with at least nine notable employees departing, including co-founders Ilya Sutskever (who participated in Altman’s attempted ouster), Andrej Karpathy, and John Schulman. CTO Mira Murati announced her departure in September to pursue “her own exploration.”
OpenAI also faced public relations challenges, including the controversial “Sky” voice incident in May, where the ChatGPT voice was pulled after actress Scarlett Johansson claimed it sounded like her without permission. Safety concerns emerged from current and former employees about AI risks, and reports surfaced about restrictive NDAs for departing staff.
On the positive side, Apple announced in June it would integrate ChatGPT into its software, including Siri, potentially reaching millions of iPhone users. An SEC investigation into whether OpenAI misled investors also came to light in February, stemming from the Altman ouster controversy.
Key Quotes
I wouldn’t wish it on an enemy. But it did have an extremely positive effect on the company.
Sam Altman told Time magazine in December 2023 about his temporary ouster from OpenAI. Despite the personal difficulty, Altman claimed the crisis ultimately unified the company, though it set the stage for a year of continued turbulence and leadership challenges.
OpenAI has been transformed into a closed-source de facto subsidiary of Microsoft.
Elon Musk stated in his February lawsuit against OpenAI and Sam Altman, arguing that the company had abandoned its nonprofit mission in favor of profit generation. This legal challenge from OpenAI’s co-founder highlighted fundamental disagreements about the company’s direction and relationship with Microsoft.
I am confident that OpenAI will build AGI that is both safe and beneficial.
Ilya Sutskever wrote in his farewell post on X in May 2024 when leaving OpenAI as co-founder and chief scientist. Despite his involvement in the attempted ouster of Altman and subsequent departure, Sutskever expressed continued faith in OpenAI’s mission to develop artificial general intelligence responsibly.
I’m leaving to create the time and space to do my own exploration.
Mira Murati announced in September when resigning as OpenAI’s Chief Technology Officer. Murati had served as interim CEO during Altman’s brief removal and was a key technical leader, making her departure another significant loss in a year marked by executive exits.
Our Take
OpenAI’s 2024 reveals the fundamental tensions at the heart of the AI revolution: the conflict between safety and speed, nonprofit ideals and commercial imperatives, and transparency versus competitive advantage. The company’s ability to raise record-breaking funding while simultaneously losing founding members and facing multiple lawsuits suggests an industry moving faster than its governance structures can handle. The Altman drama, rather than being resolved, appears to have been merely papered over, with underlying disagreements about OpenAI’s direction manifesting in departures and legal actions. Most concerning is the pattern of safety-focused researchers leaving while the company accelerates its for-profit transformation. The integration with Apple represents OpenAI’s mainstream breakthrough, but the legal battles over training data could fundamentally reshape how AI models are developed. OpenAI’s trajectory may ultimately define whether the AI industry can balance innovation with responsibility, or whether commercial pressures will inevitably override safety considerations. The next two years of its for-profit conversion will be critical.
Why This Matters
OpenAI’s 2024 trajectory represents a defining moment for the artificial intelligence industry, demonstrating both the sector’s explosive growth potential and its inherent instability. The company’s journey from an $80 billion to $157 billion valuation in just eight months illustrates the unprecedented investor appetite for AI technology and the market’s belief in generative AI’s transformative potential.
The transition from nonprofit to for-profit status signals a broader industry trend where idealistic AI safety missions collide with commercial realities and the massive capital requirements needed to develop cutting-edge AI systems. This shift raises critical questions about AI governance, safety prioritization, and whether profit motives might compromise responsible AI development.
The talent exodus and internal conflicts highlight the tensions within leading AI companies between rapid commercialization and safety concerns. When co-founders and senior researchers leave citing safety worries, it suggests potential gaps between stated commitments and actual practices. For businesses adopting AI tools, OpenAI’s partnerships with tech giants like Apple and Microsoft mean these corporate dramas directly impact the AI infrastructure millions depend on daily. The legal battles over training data and copyright will likely set precedents affecting the entire AI industry’s future development and deployment strategies.
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Source: https://www.businessinsider.com/openais-biggest-moments-in-2024-2024-12