In the recently unfolding battle to reinstate ousted founder Sam Altman as the CEO of OpenAI, it appears that Microsoft and its CEO, Satya Nadella, hold the trump cards. As negotiations are underway for Altman's potential return, it is becoming clear that Microsoft's substantial leverage and financial support are crucial factors in determining the outcome.

Critics have pointed out that Microsoft allowed itself to become overly dependent on Altman's AI startup without securing a seat on OpenAI's board. However, Microsoft's significant influence stems from the substantial amount of cash it has committed to OpenAI since 2019, amounting to at least $13 billion. While OpenAI has garnered a soaring valuation through its tender offers with venture capital firms, much of this is merely on paper, based on share sales from existing employees, founders, and earlier investors.

The extent to which OpenAI can continue as a viable enterprise without Microsoft's financial backing remains uncertain. Reports suggest that the company currently generates around $80 million per month in revenue, potentially reaching $1 billion in 2023. However, it is still unknown whether OpenAI is profitable and what its burn rate is. Documents indicate that the company incurred losses of $540 million in 2022, while only generating revenue of less than $30 million for the entire year.

One significant challenge for OpenAI is its high operational costs, including offering generous pay packages to attract top AI researchers and substantial expenses for training and running its models. OpenAI's reliance on Microsoft's cloud computing data centers, combined with the scarcity of graphic processing units (GPUs), makes it difficult for the company to transition to another cloud provider.

Microsoft's power lies in its ability to control OpenAI's access to computing power and withhold further financial support if Altman is not reinstated as CEO. Although OpenAI may have legal recourse under its partnership agreement, Microsoft could inflict significant damage on the company before legal action takes place. Furthermore, Microsoft has the option to replace OpenAI's technology with software from other leading AI startups, potentially diminishing OpenAI's standing in the industry.

While OpenAI's other investors, such as Khosla Ventures, Reid Hoffman's charitable foundation, Tiger Global, Andreesen Horowitz, Sequoia Capital, Thrive, and K2 Global, possess less potential influence on the company, they still hold some leverage through OpenAI's employees. Investors' threats to withdraw from the latest tender offer for profit participation agreements could create financial repercussions for OpenAI's employees, giving them an incentive to leave or pressure the company to reinstate Altman.

The current predicament at OpenAI highlights the flaws in its convoluted governance structure. As a minority investor in a limited liability corporation, Microsoft does not have a seat at the table when it comes to the hiring and firing of OpenAI's CEO. The intricate structure, designed to prevent a single tech giant from monopolizing artificial general intelligence (AGI), ultimately poses challenges in maintaining control and, ironically, opens the door for potential external control from one corporate entity.

Altman's return as CEO would showcase the failure of the structure he designed to safeguard OpenAI's mission. The turmoil at OpenAI also prompts investors to scrutinize the governance structure of Anthropic, a rival AI company started by researchers who broke away from OpenAI, in search of a more straightforward and equitable structure.

As negotiations continue and the power dynamics unfold, it remains to be seen whether Altman will regain his position as OpenAI's CEO. Microsoft's leverage and financial support will undoubtedly play a crucial role in shaping the company's future and determining the direction of AI research and development.