"The Clause" and Why the OpenAI-Microsoft Fight Is a Distraction

Ever since I learned about “The Clause,” it felt like my eyes were opened to what on earth is going on over at OpenAI.

For those who aren’t familiar, the CEOs of OpenAI and Microsoft have been having a public disagreement about how close we are to artificial general intelligence (AGI), which would be a truly amazing achievement. Think Data, from Star Trek, or the the Supervisor, from Skeleton Crew. (Yes, I am a nerd.)

What’s driving the tension? A clause in the contract between OpenAI and Microsoft. Wired had a good breakdown on it this weekend. It states that when the OpenAI board (yes, not an independent source, but the board) determines that OpenAI models have achieved AGI (as defined, again, by OpenAI) with sufficient revenue generation potential, Microsoft’s access to OpenAI’s models basically goes away.

To leverage models after that declaration, Microsoft will have to re-negotiate its deal at, one presumes, a much higher rate. And since Microsoft is all in on using OpenAI models to power a variety of tools, that should be a freaking windfall for OpenAI, which (like every major LLM developer) is burning cash like it is going out of style, including the $13 billion it has received from Microsoft.

Everything, everything, everything for OpenAI comes down to getting out of this deal with Microsoft. And for Microsoft, it wants to do whatever is in its power to stop this declaration from happening.

What I learned from this article in Wired is that there is a third part to The Clause: in the interim, while the deal is on, Microsoft “can’t develop AGI on its own.” So it has set itself up to be fully dependent on OpenAI in the short term.

OMG.

You - yes, you should read the full article for more context.

My complaint about this otherwise excellent reporting is that it has the situation backward: AGI is bigger than Microsoft and OpenAI. Their fight is a distraction. It’s like you’ve got a ticket to watch the Olympic gymnastics all-arounds, and someone started streaming 90-day Fiancé on their phone, so you start watching that instead of Simone Biles being the GOAT.

Is it entertaining? Sure. Important to those involved in it? Of course. But when truly awesome AI use cases are being deployed daily, is it significant to the larger discourse? Not on the merits.