Is OpenAI Becoming 'Too Big to Fail'?
OpenAI "hasn't yet turned a profit," notes Wall Street Journal business columnist Tim Higgins. "Its annual revenue is 2% of Amazon.com's sales.
"Its future is uncertain beyond the hope of ushering in a godlike artificial intelligence that might help cure cancer and transform work and life as we know it. Still, it is brimming with hope and excitement.
"But what if OpenAI fails?"
There's real concern that through many complicated and murky tech deals aimed at bolstering OpenAI's finances, the startup has become too big to fail. Or, put another way, if the hype and hope around Chief Executive Sam Altman's vision of the AI future fails to materialize, it could create systemic risk to the part of the U.S. economy likely keeping us out of recession.
That's rarefied air, especially for a startup. Few worried about what would happen if Pets.com failed in the dot-com boom. We saw in 2008-09 with the bank rescues and the Chrysler and General Motors bailouts what happens in the U.S. when certain companies become too big to fail...
[A]fter a lengthy effort to reorganize itself, OpenAI announced moves that will allow it to have a simpler corporate structure. This will help it to raise money from private investors and, presumably, become a publicly traded company one day. Already, some are talking about how OpenAI might be the first trillion-dollar initial public offering... Nobody is saying OpenAI is dabbling in anything like liar loans or subprime mortgages. But the startup is engaging in complex deals with the key tech-industry pillars, the sorts of companies making the guts of the AI computing revolution, such as chips and Ethernet cables. Those companies, including Nvidia and Oracle, are partnering with OpenAI, which in turn is committing to make big purchases in coming years as part of its growth ambitions.
Supporters would argue it is just savvy dealmaking. A company like Nvidia, for example, is putting money into a market-making startup while OpenAI is using the lofty value of its private equity to acquire physical assets... They're rooting for OpenAI as a once-in-a-generational chance to unseat the winners of the last tech cycles. After all, for some, OpenAI is the next Apple, Facebook, Google and Tesla wrapped up in one. It is akin to a company with limitless potential to disrupt the smartphone market, create its own social-media network, replace the search engine, usher in a robot future and reshape nearly every business and industry.... To others, however, OpenAI is something akin to tulip mania, the harbinger of the Great Depression, or the next dot-com bubble. Or worse, they see, a jobs killer and mad scientist intent on making Frankenstein.
But that's counting on OpenAI's success.
Read more of this story at Slashdot.