TheChek News Flow

The great European disentanglement from US stocks has only just started

A long rebalancing of investor portfolios is likely to be under way that could be painful for America

The problem for European investors in disentangling themselves from the US is that, deliberately or otherwise, they are in deep. Portfolios everywhere, retail and institutional, are stuffed to the gills with US stocks.

This can lead you to one of two conclusions: First, that the outperformance in European stocks now under way is fun but ultimately a blip, and therefore the great disentanglement won’t happen. Or second, that we are at the start of a long and painful process for the US. I lean heavily towards the latter.

By now we all know the score: The widespread, almost universal belief among institutional investors that the US would dominate global stocks in 2025 has proven to be badly misplaced. The pro-growth, low-tax, anti-red-tape narrative of Donald Trump’s second presidency has collapsed under its own weight and given way to fears of a recession or stagflation. On-again-off-again trade tariffs and widespread federal jobs cuts are gnawing away at corporate and consumer confidence.

And the depth of the administration’s loathing for supposed allies in Europe has shocked investors there deeply. Fund managers at global investment houses recognise that vice-president JD Vance’s speech in Munich was problematic, but European investors were offended in a way that Americans perhaps have not recognised.

Markets are reacting as you might expect. The dollar is sliding, and European markets are streaking ahead of the US. It’s important to understand just how unusual this is. Germany’s Dax stocks index has outperformed the US S&P 500 in just two of the past 12 years. Analysts at Deutsche Bank point out that at the current pace — and yes, it is still early in the year — this is shaping up to be the best year for outperformance in the Dax in any year since 1960. Similarly, the dollar’s woes are for the history books. It has fallen further by this point in the year only six times since 1969.

Barclays is among those warning against getting overexcited. The rush of money in to Europe-focused funds is substantial, its analysts say, but it will struggle to keep running at this pace. Similarly, Germany’s announcement of fiscal stimulus does point to higher European growth, but Trump’s trade tariffs are likely to pull in the opposite direction — a “tug of war” that means “reports of the end of US exceptionalism may well prove greatly exaggerated”.

What we do know is that European exceptionalism is still a very young investment theme, and US dominance is hard-baked in to the financial system. 

Data from the US Federal Reserve shows that European investors held about $9tn in US stocks at the end of last year — around 17 per cent of the overall value of the US market and not far off the market capitalisation of all the equities in Europe.

This gigantic overallocation to the US has not happened by magic. It has just made financial sense over the long term. Paul Marsh of the London Business School, one of the authors of UBS’s Investment Returns Yearbook — a sacred text for markets nerds — points out that one dollar invested in the US at the start of 1900 was worth $899 by the end of the century in real terms. The same dollar invested in the rest of the world was worth just $119.

The first quarter of the 21st century shows a similar gap. A dollar invested in the US at the start of 2000 was worth $3.28 by the end of 2024, again, after inflation. For the rest of the world, you end up at a rather humdrum $1.63. As a rule, non-US investors who have failed to make a significant allocation to the US have not been doing their jobs properly.

The US has been hard to avoid, in fact. By the end of last year, 10 stocks made up nearly a quarter of the global total of market capitalisation in public equities. Nine of them are from the US. The US makes up 64 per cent of the value of all global stocks, or nearly 73 per cent of developed markets. Any investor tracking a global stocks index such as the MSCI Global may think this is a neutral strategy — a nice, easy way to achieve diversification. It’s not — it’s a nice, easy way to run a massive positive bet on the US. 

“We have argued over time that the merits of the US must be fully discounted,” Marsh said at the launch of his latest yearbook earlier this month. “It’s not that the US will stop being a dominant market or the US will stop being a hugely entrepreneurial country. It’s just that all has to be in the price at some point.”

Investors everywhere are hugely overexposed to the US. That was uncomfortable enough before Trump began his second presidency, and it feels rather more reckless now. It is hard for global investors to shake off more than a century of evidence that buying US assets is simply in the best financial interests of themselves or their clients, but lighter allocations to Trump’s America represent basic risk management at this point.

Trillions of investment dollars can leave the US if the rest of the world chooses to get back towards a neutral position. The question is how easily the rest of the world’s markets can absorb that money. As Trump said in a social media post outlining one of his many sets of trade tariffs: “Have fun!”

Club World Cup: the winner takes all

Fifa has finally answered one of the key questions around the upcoming relaunch of the Club World Cup — how much it pays. On Wednesday the competition organiser revealed its prize money schedule, with payments based both on turning up and actually winning matches. You can read more on the trials and tribulations of Fifa’s $2bn punt here.

Considering the rates were negotiated with the European Club Association, it’s perhaps little surprise that the bulk of the purse is heading to the top European clubs. Some are promised $38.5mn before a ball has even been kicked, with potential earnings for winning the tournament of $125mn when ends on July 13.

Fifa has made a lot of noise about the Club World Cup being a chance to spread some of football’s wealth beyond Uefa’s sphere of influence. The month-long competition will feature 32 teams from around the globe who qualified largely based on performance in regional tournaments.

Yet the financial impact will be felt differently depending on where a team hails from.

Assuming — perhaps unfairly — that Auckland FC fails to win or draw any of its group games against Bayern Munich, Benfica or Boca Juniors, then the only entrant from Oceania will go home with just $3.6mn. Subtract the costs of competing (eg travel), and that probably doesn’t leave a lot of change.

Teams from Asia, Africa, and North America fare a bit better, with each guaranteed $9.55mn for participating. Even if they lose all their games, the tournament will still deliver an annual revenue boost this year of more than 10 per cent for teams the size of the Seattle Sounders and Urawa Red Diamonds.

Fluminense fans will probably fancy their chances of bagging some points against South Africa’s Mamelodi Sundowns and South Korean side Ulsan HD. South American teams will get at least $15.55mn for showing up, while qualification to the second round would bring an extra $7.5mn. That’s more than double the money on offer from winning the Brazilian league, and starts to look similar to the pay-off from victory in the Copa Libertadores — South America’s version of the Champions League.

For top European clubs, the money is decent to start with, but not transformative. Cash for participating equates to around 3.5 per cent of Real Madrid’s annual income, 5 per cent for Bayern Munich, and 7 per cent for Chelsea. A nice boost, but not massive.

Heftier sums come from making progress. Winning all three group stages and reaching the semi-final bags a top club more than $80mn.

For a club like Chelsea that could do with a financial sugar rush to help balance this year’s spending, the Club World Cup will be hugely welcome.

By backloading so much for winners, Fifa has also built in a serious financial incentive for actually lifting the Tiffany-designed Club World Cup. Competition should be fierce.

But it’s worth remembering this event (for now at least) will only take place once every four years. Only a tiny group of teams are virtually guaranteed to qualify again (Real Madrid, Manchester City, Bayern Munich, Paris Saint-Germain) — all of whom already feature in the top five richest clubs in the world.

So yes, there’s some trickle down economics at play. But ultimately, if the Club World Cup succeeds, the world’s wealthiest clubs will reap almost all the rewards. Plus ça change.

It wasn’t long ago—say, two months—that European governments and companies thought nothing of relying on Microsoft software for daily tasks or Amazon.com’s Amazon Web Services for data storage. Not so much anymore.

President Donald Trump, who has proclaimed that the European Union was “formed in order to screw the United States,” is girding for trade warfare over the continent’s moves to tax and regulate U.S. tech giants. A Feb. 21 White House memorandum directs relevant cabinet departments to “defend American companies and innovators from overseas extortion,” with Europe’s digital services taxes as Exhibit A.

“There are serious concerns about America weaponizing digital infrastructure,” says Dimitar Lilkov, senior research officer at the Wilfried Martens Centre for European Studies.

Enter the EuroStack. This concept was fleshed out in a “bold vision for digital sovereignty” recently issued by the Brussels-based Centre for European Policy Studies, with a roster of co-signers from academia and nongovernmental organizations.

Digital independence for Old Europe looks like an uphill climb. The U.S. accounts for 71% of global research-and-development spending on “software and internet technologies,” and 70% of “foundational AI models,” according to the report itself. China is runner-up in both categories.

European catch-up would cost 300 billion euros ($323 billion), the report estimates, while the continent is already scrambling to find huge sums for a defense upgrade. Balkanized European financial markets are no match for Nasdaq and U.S. venture capitalists in nurturing the next emerging genius. “The EuroStack cannot work without a major initiative to deepen capital markets,” says Andrea Renda, director of research at CEPS.

Europe isn’t without its own tech stars, though. German software power SAP just nosed past Danish pharma champion Novo Nordisk as the continent’s most valuable company, largely thanks to a one-third growth in cloud revenue last year. Netherlands-based ASML, a near-monopolist in machines that make the most advanced semiconductors, isn’t far behind.

The EuroStack report points to a deep bench of what might be called second-line tech names, providing the glue between cutting-edge innovation and practical use in manufacturing and energy provision. Scandinavian telecom-equipment giants Nokia and Ericsson have quietly become hot stocks again, both soaring by about 40% over the past 12 months. “Europe is more advanced than the U.S. in the 5G connectivity layers,” Renda says.

France-based Schneider Electric has had a similar run over the past 18 months, due to its potential to supply an anticipated artificial-intelligence data center boom.

Bargains are getting harder to find after a 14% year-to-date bounce in the iShares Europe exchange-traded fund, says Roland Kaloyan, head of European equity strategy at Société Générale. “The market has reached our target,” he says.

Some rough tech gems may still await discovery, though, says Michael Field, European equity strategist at Morningstar. He likes two Dutch-domiciled companies: Infineon Technologies, an Internet of Things pioneer focused on power systems, and NXP Semiconductor, which provides specialized chips to auto makers and other industries. Adyen, a point-of-sale payments provider akin to Square in the U.S., is a sleeper European fintech name, he adds.

Despite its unwieldy structure, the EU has responded rapidly and at scale to two crises in the past five years: first Covid, then Vladimir Putin’s cutoff of Russian gas after he invaded Ukraine. A continuing third shock from a vocally hostile and contemptuous U.S. administration will also spur a response.

Digital sovereignty may be far off, but watch those companies.

How do you solve a problem like Twitter? If you’re Elon Musk, you sell X to xAI.

He did OK on the sale.

In a Friday evening tweet on X, Elon Musk wrote that xAI had acquired X for $33 billion, or “$45 B less $12B debt.”

In his tweet, Musk explained the rationale behind the deal. “xAI and X’s futures are intertwined,” he wrote. “Today, we officially take the step to combine the data, models, compute, distribution and talent. This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach. The combined company will deliver smarter, more meaningful experiences to billions of people while staying true to our core mission of seeking truth and advancing knowledge. This will allow us to build a platform that doesn’t just reflect the world but actively accelerates human progress.”

Musk paid $44 billion for Twitter when he bought it in October 2022. That was essentially all equity. Musk paid $54.20 per Twitter share and financed the deal using debt. The $45 billion value, including debt, means that the total value of X rose under Musk’s sometimes tumultuous leadership.

Musk famously told advertisers leaving his social-media platform to “go f—yourself” in a 2023 interview.

Part of the increase in value was xAI itself. X owned 10% of xAI, according to Rainmaker Securities, a firm that deals in transactions for privately held companies.

The debt financing, X cross-ownership of xAI, and sale of X to xAI show that Musk isn’t only an impressive engineer of cars and rockets, he’s an impressive financial engineer, too.

Musk owned an estimated 80% of X and an estimated 50% of xAI, which he founded in 2023. According to Musk, the deal values xAI at $80 billion. That is likely the pre-X-purchase valuation, so Musk’s stake in the new xAI should be worth north of $65 billion. (That’s 50% of xAI and 80% of the equity value of X.)

X declined to comment on valuation and referred Barron’s to Musk’s tweet. It isn’t hard to get to $80 billion for xAI. OpenAI is valued at an estimated $300 billion. xAI was valued at $50 billion in November.

Musk’s holding in SpaceX is worth some $140 billion based on recent private market transactions. His Tesla stake is worth more than $170 billion, including contested stock options.

The one thing the X-xAI merger does for Tesla shareholders is lower the likelihood that Musk will have to sell Tesla stock to add capital to X. xAI is building AI models to compete with Alphabet and OpenAI and shouldn’t have any problem raising capital.

“This is a game changer and we believe the first step to Musk putting this all together under one hood and Tesla playing a major role,” said Wedbush analyst Dan Ives. “This deal makes Musk a key AI player.”

Combining Tesla with any of Musk’s other business ventures isn’t assured. Investors will be happy that Musk is consolidating some of his CEO jobs.

Shares of Tesla, the only publicly traded Musk company, were down 0.7% at $261.76 in after-hours trading Friday.

This isn’t the first time a Musk company has bought a Musk company. In 2016, Tesla bought Solar City, another Musk company, for $2.6 billion in an all-stock deal.

That business is part of Tesla’s nonautomotive operations, which also include stationary power storage for homes and utilities. Over the past five years, Tesla’s annual nonautomotive sales have grown from roughly $4 billion to $21 billion.

A stipulation of the funding round, led by SoftBank, adds pressure to OpenAI’s efforts to convert to a for-profit company

OpenAI is finalizing a $40 billion funding round in what would be one of the largest startup financings of all time. The catch: The ChatGPT maker could lose out on half that amount if it fails to meet a key condition.

In order to receive the full sum, OpenAI has to successfully restructure into an independent for-profit company by the end of the year, according to people familiar with the situation. If it doesn’t, its lead investor—SoftBank—can pare back the funding round’s size to $20 billion.

The funding stipulation adds pressure to OpenAI’s ongoing restructuring talks, which require the blessing of its largest shareholder, Microsoft MSFT -3.02%decrease; red down pointing triangle. It is also subject to review by the California attorney general.

The details

SoftBank is expected to contribute up to $30 billion to the round and is syndicating the rest to other investors, including Microsoft, some of the people said. The funding round would value OpenAI at up to $300 billion, the Journal previously reported.

The OpenAI funding is divided across two tranches. The company will initially receive $10 billion and can receive up to another $30 billion at the end of the year if it completes the for-profit change, the people said. The second tranche would be dialed back to $10 billion if the restructuring doesn’t take place by then.

The context

Investors started to demand that OpenAI transition to a for-profit company after Sam Altman was briefly removed as chief executive in late 2023. The board said at the time that Altman had failed to be consistently honest in his communications but didn’t elaborate, leading OpenAI’s investors to argue that the unconventional nonprofit structure carried too many risks. He was reinstated days later.

OpenAI told investors in its fall funding round that it would return their money if the restructuring wasn’t completed within two years. The change faces major hurdles, including fending off a lawsuit from rival Elon Musk trying to block the restructuring. OpenAI also needs approval from its largest shareholder Microsoft, and the tech giant has made clear that it won’t do so without a fight.

The stakes

Should OpenAI fail to become a for-profit, it would be difficult for the company to continue raising the billions of dollars needed to fund its money-losing operations. Investors are so far backing OpenAI with the expectation that their current stake—in the form of convertible notes—will turn into traditional equity after the restructuring.

Only receiving half of the $40 billion would squeeze OpenAI’s already strained finances.

The startup is losing billions of dollars a year to train and operate its AI systems and pay for top-notch researchers, and it has committed $18 billion for Stargate, a separate data-center construction project blessed by President Trump. SoftBank has separately committed another $18 billion to Stargate.

In addition to its computing costs, OpenAI has content-licensing deals with companies like The Wall Street Journal’s parent company, News Corp, that give it data that can be used to train its models.

Secrets, misdirection and broken trust. The inside story of how the CEO of the hottest tech company was ousted and, just as quickly, resurrected.

On a balmy mid-November evening in 2023, billionaire venture capitalist Peter Thiel threw a birthday party for his husband at YESS, an avant-garde Japanese restaurant located in a century-old converted bank building in Los Angeles’s Arts District. Seated next to him was his friend Sam Altman.

Thiel had backed Altman’s first venture fund more than a decade before, and remained a mentor to the younger investor when Altman became the face of the artificial-intelligence revolution as the chief executive of OpenAI. OpenAI’s instantly viral launch of ChatGPT in November 2022 had propelled tech stocks to one of their best years in decades. Yet Thiel was worried.

Years before he met Altman, Thiel had taken another AI-obsessed prodigy named Eliezer Yudkowsky under his wing, funding his institute, which pushed to make sure that any AI smarter than humans would be friendly to its maker. That March, Yudkowsky had argued in Time magazine that unless the current wave of AI research was halted, “literally everyone on Earth will die.”

“You don’t understand how Eliezer has programmed half the people in your company to believe in that stuff,” Thiel warned Altman. “You need to take this more seriously.”

Altman picked at his vegetarian dish and tried not to roll his eyes. This was not the first dinner where Thiel had warned him that the company had been taken over by “the EAs,” by which he meant people who subscribed to effective altruism. EA had lately pivoted from trying to end global poverty to trying to prevent runaway AI from murdering humanity. Thiel had repeatedly predicted that “the AI safety people” would “destroy” OpenAI.

“Well, it was kind of true of Elon, but we got rid of Elon,” Altman responded at the dinner, referring to the messy 2018 split with his co-founder, Elon Musk, who once referred to the attempt to create artificial intelligence as “summoning the demon.”

Nearly 800 OpenAI employees had been riding a rocket ship and were about to have the chance to buy beachfront second homes with the imminent close of a tender offer valuing the company at $86 billion. There was no need to panic.

Altman, at 38 years old, was wrapping up the best year of a charmed career, a year in which he became a household name, met with presidents and prime ministers around the world, and—most important within the value system of Silicon Valley—delivered a new technology that seemed like it was very possibly going to change everything.

But as the two investing partners celebrated beneath the exposed rafters of L.A.’s hottest new restaurant, four members of OpenAI’s six-person board, including two with direct ties to the EA community, were holding secret video meetings. And they were deciding whether they should fire Sam Altman—though not because of EA.

This account is based on interviews with dozens of people who lived through one of the wildest business stories of all time—the sudden firing of the CEO of the hottest tech company on the planet, and his reinstatement days later. At the center was a mercurial leader who kept everyone around him inspired by his technological vision, but also at times confused and unsettled by his web of secrets and misdirections.

From the start, OpenAI was set up to be a different kind of tech company, one governed by a nonprofit board with a duty not to shareholders but to “humanity.” Altman had shocked lawmakers earlier in the year when he told them under oath that he owned no equity in the company he co-founded. He agreed to the unprecedented arrangement to be on the board, which required a majority of directors to have no financial ties to the company. In June 2023, he told Bloomberg TV: “The board can fire me. That’s important.”

Behind the scenes, the board was finding, to its growing frustration, that Altman really called the shots.

For the past year, the board had been deadlocked over which AI safety expert to add to its ranks. The board interviewed Ajeya Cotra, an AI safety expert at the EA charity Open Philanthropy, but the process stalled, largely due to foot-dragging by Altman and his co-founder Greg Brockman, who was also on the board. Altman countered with his own suggestions.

“There was a little bit of a power struggle,” said Brian Chesky, the Airbnb CEO who was one of the prospective board members Altman suggested. “There was this basic thing that if Sam said the name, they must be loyal to Sam, so therefore they’re gonna say no.”

The dynamics got more contentious after three board members in the pro-Altman camp stepped down in quick succession in early 2023 over various conflicts of interest. That left six people on the nonprofit board that governed the for-profit AI juggernaut: Altman, his close ally Brockman, their fellow co-founder Ilya Sutskever, and three independent directors. These were Adam D’Angelo, the CEO of Quora and a former Facebook executive; Helen Toner, the director of strategy for Georgetown’s Center for Security and Emerging Technology and a veteran of Open Philanthropy; and Tasha McCauley, a former tech CEO and member of the U.K. board of the EA charity Effective Ventures.

Concerns about corporate governance and the board’s ability to oversee Altman became much more urgent for several board members after they saw a demo of GPT-4, a more powerful AI that could ace the AP Biology test, in the summer of 2022.

“Things like ChatGPT and GPT-4 were meaningful shifts toward the board realizing that the stakes are getting higher here,” Toner said. “It’s not like we are all going to die tomorrow, but the board needs to be functioning well.”

Toner and McCauley had already begun to lose trust in Altman. To review new products for risks before they were released, OpenAI had set up a joint safety board with Microsoft, a key backer of OpenAI that had special access to use its technology in its products. During one meeting in the winter of 2022, as the board weighed how to release three somewhat controversial enhancements to GPT-4, Altman claimed all three had been approved by the joint safety board. Toner asked for proof and found that only one had actually been approved.

Around the same time, Microsoft launched a test of the still-unreleased GPT-4 in India, the first instance of the revolutionary code being released in the wild, without approval from the joint safety board. And no one had bothered to inform OpenAI’s board that the safety approval had been skipped. The independent board members found out when one of them was stopped by an OpenAI employee in the hallway on the way out of a six-hour board meeting. Never once in that meeting had Altman or Brockman mentioned the breach.

Then, one night in the summer of 2023, an OpenAI board member overheard a person at a dinner party discussing OpenAI’s Startup Fund. The fund was launched in 2021 to invest in AI-related startups, and OpenAI had announced it would be “managed” by OpenAI. But the board member was overhearing complaints that the profits from the fund weren’t going to OpenAI investors.

The 2023 OpenAI Board

Clockwise from top left: Sam Altman, Greg Brockman, Ilya Sutskever, Tasha McCauley, Helen Toner and Adam D'Angelo

This was news to the board, so they asked Altman. Over months, directors learned that Altman owned the fund personally. OpenAI executives first said it had been for tax reasons, then eventually explained Altman had set up the fund because it was faster and only a “temporary” arrangement. OpenAI said Altman earned no fees or profits from the fund—an unusual arrangement.

To the independent board members, the administrative oversight defied belief—and cast previous oversights as part of a possible pattern of deliberate deception. For instance, they also hadn’t been alerted the previous fall when OpenAI released ChatGPT, at the time considered a “research preview” that used existing technology, but that ended up taking the world by storm. (News Corp, owner of The Wall Street Journal, has a content-licensing partnership with OpenAI.)

In late September, Sutskever emailed Toner asking if she had time to talk the next day. This was highly unusual. They didn’t really talk outside of board meetings. On the phone, Sutskever hemmed and hawed before coughing up a clue: “You should talk to Mira more.”

Mira Murati had been promoted to chief technology officer of OpenAI in May 2022, and had effectively been running the day-to-day ever since. When Toner called her, Murati described how what she saw as Altman’s toxic management style had been causing problems for years, and how the dynamic between Altman and Brockman—who reported to her but would go to Altman anytime she tried to rein him in—made it almost impossible for her to do her job.

Murati had raised some of these issues directly with Altman months earlier, and Altman had responded by bringing the head of HR to their one-on-one meetings for weeks until she finally told him she didn’t intend to share her feedback with the board.

Toner went back to Sutskever, the company’s oracular chief scientist. He made clear he had lost trust in Altman for numerous reasons, including his tendency to pit senior employees against each other. In 2021, Sutskever had mapped out and launched a team to pursue the next research direction for OpenAI, but months later another OpenAI researcher, Jakub Pachocki, began pursuing something very similar. The teams merged, and Pachocki took over after Sutskever turned his focus to AI safety. Altman later elevated Pachocki to research director and privately promised both of them they could lead the research direction of the company, which led to months of lost productivity.

Sutskever had been waiting for a moment when the board dynamics would allow for Altman to be replaced as CEO.

Treading carefully, in terror of being found out by Altman, Murati and Sutskever spoke to each of the independent board members over the next few weeks. It was only because they were in daily touch that the independent directors caught Altman in a particularly egregious lie.

Toner had published a paper in October that repeated criticisms of OpenAI’s approach to safety. Altman was livid. He told Sutskever that McCauley had said Toner should obviously leave the board over the article. McCauley was taken aback when she heard this account from Sutskever—she knew she had said no such thing.

Sutskever and Murati had been collecting evidence, and now Sutskever was willing to share. He emailed Toner, McCauley and D’Angelo two lengthy pdf documents using Gmail’s self-destructing email function.

One was about Altman, the other about Brockman. The Altman document consisted of dozens of examples of his alleged lies and other toxic behavior, largely backed up by screenshots from Murati’s Slack channel. In one of them, Altman had told Murati that the company’s legal department had said that GPT-4 Turbo didn’t need to go through the joint safety board review. When Murati checked with the company’s top lawyer, he said he had not said that. The document about Brockman largely focused on his alleged bullying.

If they were going to act, Sutskever warned, they had to act quickly.

And so, on the afternoon of Thursday, Nov. 16, 2023, he and the three independent board members logged into a video call and voted to fire Altman. Knowing Murati was unlikely to agree to be interim CEO if she had to report to Brockman, they also voted to remove Brockman from the board. After the vote, the independent board members told Sutskever they had been worried that he’d been sent as a spy to test their loyalty.

That night, Murati was at a conference when the four board members called her to say they were firing Altman the next day and to ask her to step in as interim CEO. She agreed. When she asked why they were firing him, they wouldn’t tell her.

“Have you communicated this to Satya?” Murati asked, knowing how essential Microsoft CEO Satya Nadella’s commitment to their partnership was to the company. They had not. They decided that Murati would tell Microsoft just before the news was posted on OpenAI’s website.

Altman’s surprise firing instantly became an explosive headline around the world.

But the board had no answers for employees or the wider public for why Altman was fired, beyond that he had not been “consistently candid” with the board.

Friday night, OpenAI’s board and executive team held a series of increasingly contentious meetings. Murati had grown concerned that the board was putting OpenAI at risk by not better preparing for the repercussions of Altman’s firing. At one point, she and the rest of the executive team gave the board a 30-minute deadline to explain why they fired Altman or resign—or else the executive team would quit en masse.

The board felt they couldn’t divulge that it had been Murati who had given them some of the most detailed evidence of Altman’s management failings. They had banked on Murati calming employees while they searched for a CEO. Instead, she was leading her colleagues in a revolt against the board.

A narrative began to spread among Altman’s allies that the whole thing was a “coup” by Sutskever, driven by his anger over Pachocki’s promotion, and boosted by Toner’s anger that Altman had tried to push her off the board.

Sutskever was astounded. He had expected the employees of OpenAI to cheer.

By Monday morning, almost all of them had signed a letter threatening to quit if Altman wasn’t reinstated. Among the signatures were Murati’s and Sutskever’s. It had become clear that the only way to keep the company from imploding was to bring back Altman.