The dramatic turn of events involving Sam Altman, Microsoft, and OpenAI may well shape the future of the artificial intelligence race.
After Altman’s shock firing by the ChatGPT creator Friday for not being “consistently candid in his communications with the board,” he had looked set for a rapid return to the company he co-founded. But then talks suddenly fell apart Sunday.
Microsoft CEO Satya Nadella, ever the opportunist, swooped in and swiftly hired Altman to lead a new in-house advanced AI research team.
It’s a smart play by the tech giant and one that protects its position as a market leader. It keeps Altman—the face of the AI boom—on board and prevents him from joining a rival. “The mission continues,” Altman said in a post on X.
It stands to reason that he has been given carte blanche to do his own thing, even at a behemoth like Microsoft—otherwise he may have taken more time to consider his next move. The company will also have total control over anything created by Altman and fellow OpenAI co-founder Greg Brockman, who is also joining the new team. Something it didn’t have with OpenAI in which it has a 49% stake.
It’s not just significant in maintaining Microsoft’s dominance, but in the wider ideological war being waged over the technology. The battle between those who want AI technological developments to accelerate and those who want a deceleration.
Emmett Shear, the new OpenAI CEO installed by the board, is in favor of a slowdown to build a safe AI future.
Tesla
CEO Elon Musk was among those who signed an open letter calling for a six-month pause in the training of systems to allow time for safety protocols to be established.
Altman sits more in the acceleration camp. Unfortunately for the pause protagonists, they need the whole industry to support a deceleration. Having two of the top AI minds moving in-house at Microsoft to speed things up won’t help the slowdown supporters’ cause.
—Callum Keown
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Brockman Also Joins In-House Artificial Intelligence Team
Following his dramatic firing as CEO of OpenAI, Altman will now lead Microsoft’s own artificial-intelligence research team, which could present several headaches for both companies.
- Microsoft said overnight on Sunday that former OpenAI CEO Altman and former OpenAI President Greg Brockman would both join the company to lead a new advanced AI research team.
- Altman’s hiring at Microsoft came after efforts to restore him at OpenAI faltered late Sunday, with the ChatGPT developer’s board refusing to agree to the proposed terms of his reinstatement. Microsoft has a 49% stake in OpenAI but couldn’t overcome resistance to Altman’s return from the board that fired him last week.
- “We remain committed to our partnership with OpenAI,” Microsoft CEO Satya Nadella said in a statement. Nadella also said that Microsoft looked forward to getting to know OpenAI’s new interim CEO, Emmett Shear, former chief executive of Amazon-owned video-streaming platform Twitch.
What’s Next: Microsoft will now have to decide how to split backing and resources between OpenAI and Altman’s team at Microsoft. One immediate issue could be a brain drain at OpenAI with employees either seeking to follow Altman or being lured away by rivals, with the company’s share-sale plans now threatened.
—Adam Clark
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Investors Will Eye Fed Minutes for Signs of Rate Cuts
This week the Federal Reserve will release the minutes of its last policy meeting, which ended Nov. 1 with a decision to hold interest rates steady. Since then, central bank officials have continued highlighting how much uncertainty remains ahead, declaring they are open to further rate increases if merited.
- Markets will scour the minutes Tuesday for any comments that could confirm a chance the Fed might cut interest rates as soon as March and lower the benchmark rate by a full percentage point during 2024. Futures traders see a 30% probability of a March cut, after two rate pauses.
- Even with headline inflation slowing to a 3.2% annual pace in October, Boston Fed President Susan Collins told CNBC it was necessary to be patient and resolute. Since it is unclear whether the housing price moderation will be sustained, “I wouldn’t take additional firming off the table,” she said.
- As inflation falls, the real rate will become more restrictive even if the Fed remains paused, helping to slow the economy. And even though Fed officials are keeping their options open, they are simultaneously flagging the rising challenges they see both in the U.S. and globally.
- Fed Gov. Lisa Cook said small business loans, the slowdown in homebuying, rising auto loan and credit-card delinquencies, and dwindling savings among low- and moderate-income households “could be warning of broader stress ahead.”
What’s Next: UBS economist Jonathan Pingle is forecasting that the fed-funds rate will drop to just below 3% by the end of next year, from more than 5% now.
Goldman Sachs
economists expect the fed-funds rate to fall to between 3.50% and 3.75% by 2026.
—Megan Cassella, Megan Leonhardt, and Janet H. Cho
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Stormy Weather and Cold on Menu for Thanksgiving Travel
Thanksgiving travelers in the Eastern U.S. could see heavy rain, thunderstorms, and colder temperatures on Tuesday, including at major airports in New York, Washington, Atlanta, and Chicago, potentially snarling air and road travel ahead of one of the busiest travel weekends in years.
-
Delta Air Lines
is expecting up to 6.4 million passengers through Tuesday, Nov. 28, an average of up to 530,000 customers a day. Delta is encouraging passengers to arrive three hours before their flights, and said security, bag checks, and other airport functions could take longer. -
Southwest Airlines
and
American Airlines
are reminding passengers to arrive at least two hours early (at least three hours for international flights), and plan for longer wait times for airport services. They are urging travelers to check in online, curbside, or through self-service kiosks. -
United Airlines
is encouraging travelers to use their United apps to check bags and save time. New tech offerings aim to help users skip lines, get through airport security faster, navigate unfamiliar airports, preorder food or drinks, make tight connections, and contact customer service. -
JetBlue Airways
is also urging customers to allow additional time for traffic and transportation challenges, and monitor their flight status online or on the JetBlue app before heading to the airport.
What’s Next: The Transportation Security Administration expects to screen 30 million passengers between Friday, Nov. 17 and Tuesday, Nov. 28, including 2.7 million passengers this Wednesday. TSA expects to surpass the peak 2.9 million passengers agents screened on June 30 during this Thanksgiving season.
—Janet H. Cho
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GM’s Cruise CEO Resigns Amid Safety Concerns
The CEO of
General Motors
’ robotaxi start-up Cruise has resigned as the self-driving business looks to get back on the right track following a series of setbacks amid concerns over safety.
- Kyle Vogt, who co-founded the company and oversaw its acquisition by GM in 2016, announced his resignation in a post on X late Sunday. It comes after an accident in early October ultimately led to the suspension of Cruise’s license to operate self-driving taxis in California.
- A hit-and-run victim ended up under a Cruise taxi and the vehicle didn’t respond as well as a human driver might have, Barron’s previously reported. GM and Cruise didn’t immediately respond to a request for comment early Monday.
-
Cruise halted its entire driverless fleet nationwide at the end of October to examine its operations and “take steps to rebuild public trust.” GM also paused production of Cruise taxis. Vogt’s departure is another blow for Cruise and for GM as the auto maker believes Cruise could generate $50 billion in annual sales by 2030.
What’s Next: The robotaxi company announced additional steps to improve safety earlier this month, including an independent expert to conduct a safety assessment. An engineering firm also is investigating the cause of the incident. GM needs Cruise to be a success. It now needs to get back on the road without the help of Cruise’s CEO and co-founder.
—Callum Keown
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Home Sales Numbers May Be Bottoming Out as Rates Ease
After months of rising mortgage rates and sky-high sale prices keeping prospective buyers on the sideline, economists see home sales about to turn the corner. National Association of Realtors Chief Economist Lawrence Yun expects mortgage rates to fall to a range between 6% and 7% this spring.
- Tuesday’s report on existing home sales is expected to show another slide in October, to a seasonally adjusted annual rate of 3.9 million. That would be the fifth straight monthly drop, according to economists polled by The Wall Street Journal. September’s number was already a 13-year low.
- The National Association of Home Builders’ monthly measure of industry sentiment slid in November to its lowest level since late 2022. Applications for home purchase loans earlier this year slid to the lowest level since 1995, the Mortgage Bankers Association said.
- But mortgage rates are falling back from 8%, and Yun said the peak has likely already been reached. The average 30-year fixed-rate mortgage was 7.44% on Thursday, according to Freddie Mac, its lowest level since September and the third consecutive week-over-week decline.
- The weekly volume of home-purchase loan applications, although lower than a year ago, has gained a seasonally adjusted 3% for two weeks straight, the Mortgage Bankers Association said.
What’s Next: The NAR forecasts home sales will trough in the fourth quarter and pick up in the new year as mortgage rates slide as low as 6.3% by the end of 2024. The Mortgage Bankers Association and
Fannie Mae
also see home sales increasing in 2024 as rates decline.
—Shaina Mishkin and Janet H. Cho
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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner
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