Garrison Lovely
@garrisonlovely.bsky.social
Writing a book on AI+economics+geopolitics for Nation Books.
Covers: The Nation, Jacobin. Bylines: NYT, Nature, Bloomberg, BBC, Guardian, TIME, The Verge, Vox, Thomson Reuters Foundation, + others.
Covers: The Nation, Jacobin. Bylines: NYT, Nature, Bloomberg, BBC, Guardian, TIME, The Verge, Vox, Thomson Reuters Foundation, + others.
Here's all my past reporting and analysis on the OpenAI restructuring: api.omarshehata.me/substack-pr...
And if you made it this far, you should definitely subscribe to Obsolete, where I report on the economics+geopolitics of AI. (Been heads down on my book but will be back soon)
And if you made it this far, you should definitely subscribe to Obsolete, where I report on the economics+geopolitics of AI. (Been heads down on my book but will be back soon)
Obsolete | Garrison Lovely | Substack
Reporting and analysis on capitalism, great power competition, and the race to build machine superintelligence from journalist w/ work in NYT, Nature, BBC, TIME, and more. Click to read Obsolete, by Garrison Lovely, a Substack publication.
api.omarshehata.me
October 28, 2025 at 10:59 PM
Here's all my past reporting and analysis on the OpenAI restructuring: api.omarshehata.me/substack-pr...
And if you made it this far, you should definitely subscribe to Obsolete, where I report on the economics+geopolitics of AI. (Been heads down on my book but will be back soon)
And if you made it this far, you should definitely subscribe to Obsolete, where I report on the economics+geopolitics of AI. (Been heads down on my book but will be back soon)
But the Judge all-but-ruled that if Musk had standing, she would have blocked the restructuring. The AGs definitely have standing, but chose not to do this, and it now seems very unlikely that she'll undo this deal. api.omarshehata.me/substack-pr...
October 28, 2025 at 10:59 PM
But the Judge all-but-ruled that if Musk had standing, she would have blocked the restructuring. The AGs definitely have standing, but chose not to do this, and it now seems very unlikely that she'll undo this deal. api.omarshehata.me/substack-pr...
Overall, it was hard to see OAI and its investors not getting their way on this one. The big lingering question is how does the Musk lawsuit resolve? The trial begins this Fall. OAI's investors don't seem worried enough to withhold their investment.
October 28, 2025 at 10:59 PM
Overall, it was hard to see OAI and its investors not getting their way on this one. The big lingering question is how does the Musk lawsuit resolve? The trial begins this Fall. OAI's investors don't seem worried enough to withhold their investment.
But the media and public framed it as a huge win for opponents of the restructuring. Even OAI employees told me they were really happy that the nonprofit would stay in control. www.obsolete.pub/p/four-pred...
October 28, 2025 at 10:59 PM
But the media and public framed it as a huge win for opponents of the restructuring. Even OAI employees told me they were really happy that the nonprofit would stay in control. www.obsolete.pub/p/four-pred...
OAI also navigated the complexity of the situation to its great benefit. The plan to "keep the nonprofit in control" defaulted to much (most?) of what it wanted in its original restructuring effort to totally sideline its nonprofit.
October 28, 2025 at 10:59 PM
OAI also navigated the complexity of the situation to its great benefit. The plan to "keep the nonprofit in control" defaulted to much (most?) of what it wanted in its original restructuring effort to totally sideline its nonprofit.
If OAI went poof, there's a strong case that the US stock market would crash, and maybe the economy with it. OAI also hired an enormous number of lobbyists with extensive ties to CA. www.politico.com/news/2025/0...
October 28, 2025 at 10:59 PM
If OAI went poof, there's a strong case that the US stock market would crash, and maybe the economy with it. OAI also hired an enormous number of lobbyists with extensive ties to CA. www.politico.com/news/2025/0...
But, I thought, isn't this ultimately a political question? The AGs were the key potential blockers — both elected officials. OAI has become one of the most powerful organizations in the world, with deals that are now driving hundreds of billions in stock valuation.
October 28, 2025 at 10:59 PM
But, I thought, isn't this ultimately a political question? The AGs were the key potential blockers — both elected officials. OAI has become one of the most powerful organizations in the world, with deals that are now driving hundreds of billions in stock valuation.
I've covered this story extensively for a year, and the recurring theme from my convos with law profs was that the actual law said that OAI should not be allowed to do this w/o showing that it would advance its mission to "ensure AGI benefits humanity."
October 28, 2025 at 10:59 PM
I've covered this story extensively for a year, and the recurring theme from my convos with law profs was that the actual law said that OAI should not be allowed to do this w/o showing that it would advance its mission to "ensure AGI benefits humanity."
Broken here for Obsolete: www.obsolete.pub/p/exclusive...
Exclusive: OpenAI Admitted its Nonprofit Board is About to Have a Lot Less Power
In a previously unreported letter, the AI company defends its restructuring plan while attacking critics and making surprising admissions
www.obsolete.pub
October 28, 2025 at 10:59 PM
Broken here for Obsolete: www.obsolete.pub/p/exclusive...
An argument that one could make is that doing away with the profit caps was necessary for OAI to have a chance at actually hitting them, bc they wouldn't be able to continue to raise capital otherwise. This was something that OAI suggested in its letter to the AGs.
October 28, 2025 at 10:59 PM
An argument that one could make is that doing away with the profit caps was necessary for OAI to have a chance at actually hitting them, bc they wouldn't be able to continue to raise capital otherwise. This was something that OAI suggested in its letter to the AGs.
It's easy to see these numbers and write them off as ridiculous, but I think they're in the ballpark of what OAI founders actually expected when they wrote things like "it may be difficult to know what role money will play in a post-AGI world."
October 28, 2025 at 10:59 PM
It's easy to see these numbers and write them off as ridiculous, but I think they're in the ballpark of what OAI founders actually expected when they wrote things like "it may be difficult to know what role money will play in a post-AGI world."
In this world, Microsoft only captures <1% of the total value, with the VAST majority going to the nonprofit.
October 28, 2025 at 10:59 PM
In this world, Microsoft only captures <1% of the total value, with the VAST majority going to the nonprofit.
UVA economist Anton Korinek has used standard economic models to estimate the value of AGI at between $1.25-71 quadrillion and assumes that OAI will capture 0.3*0.05 of that, which comes out to a $30.9T valuation for OAI.
www.genaiforecon.org/ValueAGI.pdf
www.genaiforecon.org/ValueAGI.pdf
October 28, 2025 at 10:59 PM
UVA economist Anton Korinek has used standard economic models to estimate the value of AGI at between $1.25-71 quadrillion and assumes that OAI will capture 0.3*0.05 of that, which comes out to a $30.9T valuation for OAI.
www.genaiforecon.org/ValueAGI.pdf
www.genaiforecon.org/ValueAGI.pdf
So, spending the political capital to get rid of them only makes sense if investors think there's an appreciable chance of OAI hitting them, which seems a lot less implausible now than it did back in 2019.
October 28, 2025 at 10:59 PM
So, spending the political capital to get rid of them only makes sense if investors think there's an appreciable chance of OAI hitting them, which seems a lot less implausible now than it did back in 2019.
Zvi quotes Matt Levine estimating the value of the profit cap of up to $272B, back when OAI was only worth $157B (it's now $500B).
Obviously, this all depends on how well OAI actually does. But, the profit caps ONLY bite if OAI does very well.
Obviously, this all depends on how well OAI actually does. But, the profit caps ONLY bite if OAI does very well.
October 28, 2025 at 10:59 PM
Zvi quotes Matt Levine estimating the value of the profit cap of up to $272B, back when OAI was only worth $157B (it's now $500B).
Obviously, this all depends on how well OAI actually does. But, the profit caps ONLY bite if OAI does very well.
Obviously, this all depends on how well OAI actually does. But, the profit caps ONLY bite if OAI does very well.
Rationalist blogger Zvi Mowshowitz has been consistently calling this the greatest theft in human history. He's argued that the control premium alone should give the nonprofit 20-40% of the PBC, before you even account for the value of profit beyond the caps.
x.com/TheZvi/stat...
x.com/TheZvi/stat...
October 28, 2025 at 10:59 PM
Rationalist blogger Zvi Mowshowitz has been consistently calling this the greatest theft in human history. He's argued that the control premium alone should give the nonprofit 20-40% of the PBC, before you even account for the value of profit beyond the caps.
x.com/TheZvi/stat...
x.com/TheZvi/stat...
But it does give the nonprofit 26% stake in the for profit PBC plus unspecified additional equity if OAI >10xes after 15 years.
This is better than no profit caps and just the 26% stake, but still WAY worse than having the profit caps, at least in the worlds where OAI succeeds.
This is better than no profit caps and just the 26% stake, but still WAY worse than having the profit caps, at least in the worlds where OAI succeeds.
October 28, 2025 at 10:59 PM
But it does give the nonprofit 26% stake in the for profit PBC plus unspecified additional equity if OAI >10xes after 15 years.
This is better than no profit caps and just the 26% stake, but still WAY worse than having the profit caps, at least in the worlds where OAI succeeds.
This is better than no profit caps and just the 26% stake, but still WAY worse than having the profit caps, at least in the worlds where OAI succeeds.
The second big thing at stake with the restructuring was the profit caps. OAI famously had limits on how much investors could make on their investments, everything past them went back to the nonprofit.
This plan does away with the caps.
This plan does away with the caps.
October 28, 2025 at 10:59 PM
The second big thing at stake with the restructuring was the profit caps. OAI famously had limits on how much investors could make on their investments, everything past them went back to the nonprofit.
This plan does away with the caps.
This plan does away with the caps.
Though, new measures are still weaker than prev nonprofit control, when no decisions, in theory, were subject to profit pressure. That OAI has had major scandals throughout its history while nominally being under nonprofit control shows the limits of corporate governance here.
October 28, 2025 at 10:59 PM
Though, new measures are still weaker than prev nonprofit control, when no decisions, in theory, were subject to profit pressure. That OAI has had major scandals throughout its history while nominally being under nonprofit control shows the limits of corporate governance here.
Overall, if you're mainly worried about OAI recklessly pursuing some catastrophically risky AI development, then there's at least some on-paper governance measures hedging against that. Here are details from the new articles of incorporation:
October 28, 2025 at 10:59 PM
Overall, if you're mainly worried about OAI recklessly pursuing some catastrophically risky AI development, then there's at least some on-paper governance measures hedging against that. Here are details from the new articles of incorporation:
However, Page replies that the foundation board is almost identical to the PBC "kinda gutting this power." CMU prof Zico Kolter is the only one on the nonprofit board who's not also on the PBC board.
October 28, 2025 at 10:59 PM
However, Page replies that the foundation board is almost identical to the PBC "kinda gutting this power." CMU prof Zico Kolter is the only one on the nonprofit board who's not also on the PBC board.
Here's Todor Markov, another ex-OAI employee, highlighting the fact that the OAI Foundation (i.e. nonprofit) can replace the directors of the for-profit, which is more than he expected to get.
x.com/todor_m_mar...
x.com/todor_m_mar...
October 28, 2025 at 10:59 PM
Here's Todor Markov, another ex-OAI employee, highlighting the fact that the OAI Foundation (i.e. nonprofit) can replace the directors of the for-profit, which is more than he expected to get.
x.com/todor_m_mar...
x.com/todor_m_mar...
There are some important commitments the DE AG announced, here's former OAI employee and co-organizer of the Not for Private Gain letters Page Hedley highlighting some of them.
x.com/michaelhpag...
x.com/michaelhpag...
October 28, 2025 at 10:59 PM
There are some important commitments the DE AG announced, here's former OAI employee and co-organizer of the Not for Private Gain letters Page Hedley highlighting some of them.
x.com/michaelhpag...
x.com/michaelhpag...
Overall, this seems like a relative win on governance compared to the previous plan, but still an enormous loss on the profit caps — only slightly mitigated by some additional equity the nonprofit will get if OAI does very well. Going thru each in turn.
October 28, 2025 at 10:59 PM
Overall, this seems like a relative win on governance compared to the previous plan, but still an enormous loss on the profit caps — only slightly mitigated by some additional equity the nonprofit will get if OAI does very well. Going thru each in turn.
I got 3 wrong because OAI grew ridiculously fast, going from starting to raise a $300B round in March to selling equity at $500B in October.
October 28, 2025 at 10:59 PM
I got 3 wrong because OAI grew ridiculously fast, going from starting to raise a $300B round in March to selling equity at $500B in October.