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OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But requests for a fraction of that compute were often denied, blocking the team from doing their work.

That issue, among others, pushed several team members to resign this week, including co-lead Jan Leike, a former DeepMind researcher who while at OpenAI was involved with the development of ChatGPT, GPT-4, and ChatGPT’s predecessor, InstructGPT.

Leike went public with some reasons for his resignation on Friday morning. “I have been disagreeing with OpenAI leadership about the company’s core priorities for quite some time, until we finally reached a breaking point,” Leike wrote in a series of posts on X. “I believe much more of our bandwidth should be spent getting ready for the next generations of models, on security, monitoring, preparedness, safety, adversarial robustness, (super)alignment, confidentiality, societal impact, and related topics. These problems are quite hard to get right, and I am concerned we aren’t on a trajectory to get there.”

OpenAI did not immediately return a request for comment about the resources promised and allocated to that team.

OpenAI formed the Superalignment team last July, and it was led by Leike and OpenAI co-founder Ilya Sutskever, who also resigned from the company this week. It had the ambitious goal of solving the core technical challenges of controlling superintelligent AI in the next four years. Joined by scientists and engineers from OpenAI’s previous alignment division as well as researchers from other orgs across the company, the team was to contribute research informing the safety of both in-house and non-OpenAI models, and, through initiatives including a research grant program, solicit from and share work with the broader AI industry.

The Superalignment team did manage to publish a body of safety research and funnel millions of dollars in grants to outside researchers. But, as product launches began to take up an increasing amount of OpenAI leadership’s bandwidth, the Superalignment team found itself having to fight for more up front investments — investments it believed were critical to the company’s stated mission of developing superintelligent AI for the benefit of all humanity.

“Building smarter-than-human machines is an inherently dangerous endeavor,” Leike continued. “But over the past years, safety culture and processes have taken a backseat to shiny products.”

Sutskever’s battle with OpenAI CEO Sam Altman served as a major added distraction.

Sutskever, along with OpenAI’s old board of directors, moved to abruptly fire Altman late last year over concerns that Altman hadn’t been “consistently candid” with the board’s members. Under pressure from OpenAI’s investors, including Microsoft, and many of the company’s own employees, Altman was eventually reinstated, much of the board resigned, and Sutskever reportedly never returned to work.

According to the source, Sutskever was instrumental to the Superalignment team — not only contributing research but serving as a bridge to other divisions within of OpenAI. He would also serve as an ambassador of sorts, impressing the importance of the team’s work on key OpenAI decision makers.

Following the departures of Leike and Sutskever, John Schulman, another OpenAI co-founder, has moved to head up the type of work the Superalignment team was doing, but there will no longer be a dedicated team — instead, it will be a loosely associated group of researchers embedded in divisions throughout the company. An OpenAI spokesperson described it as “integrating [the team] more deeply.”

The fear is that, as a result, OpenAI’s AI development won’t be as safety-focused as it could’ve been.

Beijing announces plan to clear backlog of unsold homes, but questions remain over scale and financing

China rolled out its boldest steps yet to fix its broken housing market, as Beijing sought to finally bring to an end a drawn-out real-estate crunch that has hobbled its economy for years.

The centerpiece of Friday’s measures is Beijing’s embrace of a policy already being tested in some cities in China—getting city and local authorities to buy up unsold homes and convert them into affordable housing for low- and middle-income families.

The package also includes scrapping minimum interest rates on mortgages and reducing required down payments for would-be home buyers.

These measures signal “the beginning of the end of China’s housing crisis,” said Ting Lu, chief China economist at investment bank Nomura.

Chinese property stocks surged on Friday. Shares of real-estate giant Sunac China jumped 26% while Hong Kong-listed shares of China Vanke rose 19%.

Once valued at twice the size of the U.S. residential market, China’s property sector is in free fall. Sales have crumbled and construction has ground to a near-halt.

Since the start of the downturn, more than 50 developers, including once-vaunted giants such as China Evergrande Group and Country Garden, have defaulted on their international debts. About 500,000 people have lost their jobs, according to Keyan, a private think tank based in Shanghai.

By stepping in as a buyer of last resort for millions of properties, the government is seeking to bail out failed developments, mop up housing inventory and persuade spooked buyers to re-enter the market.

The broader hope is that stopping the rot in the property market will get Chinese consumers spending again, lifting the overall economy. New data Friday showed retail sales slowed last month and property investment tumbled almost 10% year over year. Chinese leaders have been turning to manufacturing and exports to power growth, but that has been aggravating trade tensions with the rest of the world.

The Wall Street Journal reported in February that China was considering buying up distressed property and converting it into affordable homes, among other policy options for fixing the property market.

Still, the scale of the program—and where cities and cash-strapped local governments will get the funding to pay for it—isn’t clear. Economists estimate clearing the enormous backlog of empty or unfinished homes dotting China will cost hundreds of billions of dollars. Only the central government in Beijing or the People’s Bank of China would have the necessary resources to finance a nationwide expansion of the home-buying plan, they say.

China has announced plans to issue billions of dollars worth of long-dated bonds, though it hasn’t specifically said the proceeds will be steered toward real estate. The central bank on Friday announced a so-called relending program that will funnel 300 billion yuan, equivalent to around $41 billion, in funding to banks to support home purchases by state-owned firms, though that sum falls far short of what economists say is required.

Friday’s package follows a flurry of measures last year that included interest-rate cuts and tweaks to property-purchase rules, none of which sparked a lasting turnaround in real estate.

Economists say clearing the backlog of unsold homes and finishing stalled projects is essential to easing China’s property woes and reigniting beaten-down consumer and business confidence.

Arthur Budaghyan, chief emerging markets strategist at BCA Research in Montreal, said he thinks an even larger sum will need to be pumped into distressed real estate—at least 5 trillion yuan—to have a meaningful effect on the wider economy. And it will need to be spent quickly, he said, not dribbled out over three to five years. “The problem is how much, when and how fast,” he said.

China on Friday sold the first batch of a planned 1 trillion yuan of ultralong bonds, which the government said will be spent on supporting the economy and funding strategic projects.

Carlos Casanova, senior Asia economist at Union Bancaire Privée in Hong Kong, said he expects some of the funds will be channeled to local governments to finance the home-buying plan. He said buying up unsold homes won’t lead to a revival in China’s real-estate market overnight. But he said it should persuade households that the worst is over and that sales and prices should start to pick up. “They just need to know there’s light at the end of the tunnel,” he said.

New figures Friday showed how distant that prospect still appears. Average new-home prices fell 0.58% in April from March, the largest monthly drop in 10 years, China’s National Bureau of Statistics said. Property investment declined 9.8% from a year earlier in the first four months of the year, widening a 9.5% drop recorded in the first quarter, according to data released by the statistics bureau.

The real-estate rescue plan comes as other data Friday showed China’s economy becoming even more lopsided and reliant on industry to power growth as the property downturn weighs on consumption.

Retail sales in China rose 2.3% in April compared with a year earlier, China’s National Bureau of Statistics said Friday, a slowdown from the 3.1% recorded in March and weaker than the 4% growth forecast by economists polled by The Wall Street Journal.

The fallback reflected weaker spending on cars and home appliances, data showed, despite a government effort to encourage people to trade in old products for new ones.

Consumers are still showing a preference for saving a lot, said Tencent President Martin Lau when he was asked about the technology firm’s wealth management business on an earnings call this week. That trend has been reflected in inflows into money-market funds, which invest in short-term debt securities. “There is a reduced willingness for consumers to spend,” he said.

China’s industrial sector recorded a much better performance last month, with industrial production rising 6.7% year over year, accelerating from 4.5% in March.

With its property sector crippled and consumer spending in the doldrums, China has turned to manufacturing to give its economy a lift. Loans have poured into factories, and especially those in favored sectors such as electric vehicles, batteries and renewable energy equipment.

But weak spending at home means those goods are increasingly being shipped overseas at low prices, aided by a weak currency.

President Biden this week announced new tariffs on around $18 billion of Chinese imports, saying Chinese subsidies and other unfair trade practices threaten American jobs. The measures include raising tariffs on Chinese-made electric vehicles to 100%, effectively locking them out of the lucrative U.S. market.

China says such moves are protectionist and reflect the US’s dwindling competitiveness in key industries.

Move by Canadian pension fund is sign of escalating financial crisis at UK’s largest water supplier

Thames Water’s biggest shareholder has written off its investment in the utility in a sign of the escalating financial crisis at the UK’s largest water company.

A Singapore-registered subsidiary of Ontario Municipal Employees Retirement System, which holds a 31 per cent stake in Thames Water, said in accounts filed on Friday it would make “a full writedown of [its] investment and loan receivable with accrued interest”.

Thames Water has been struggling with rising interest rates on its £18bn of debt and needs a £750mn cash injection from its owners by the end of this year to keep running and deliver infrastructure improvements.

The UK’s biggest utility, which serves 16mn customers, has been embroiled in disputes with regulators over water bills, fines and dividends and has failed to reach an agreement with them over its business plan.

“With the major shareholder writing off their investment, it is only a matter of time before the government has to take over,” said Tim Whittaker, research director at the EDHEC Infrastructure Institute.

Omers, one of Canada’s biggest public sector pension funds, holds its stake in Thames Water through multiple investment vehicles including its Singapore-registered entity.

Omers Farmoor Singapore PTE owns about a fifth of Thames Water in addition to further stakes held by other Omers entities. The writedown would apply to the overall 31 per cent stake, Omers told the Financial Times.

The Singapore entity filed its accounts a day after Omers withdrew its representative, Michael McNicholas, from the utility’s board with immediate effect.

Omers, whose fund value at the end of 2023 stood at about £74.5bn, confirmed the full writedown. Thames Water declined to comment.

The Universities Superannuation Scheme, the UK pension fund that is Thames Water’s second-biggest shareholder, did not immediately respond to a request seeking comment.

Omers’ decision will compound concerns over the finances at Thames Water. The government has already made contingency plans for the utility’s temporary renationalisation, dubbed Project Timber.

Omers and eight other shareholders decided in March not to inject much-needed equity into the business after discussions with regulator Ofwat, saying that the company was “uninvestable”.

Thames Water had asked for a 56 per cent increase in bills including inflation, as well as limits to regulatory fines and leniency on dividend rules. Ofwat is due to produce a draft ruling on June 12 but Thames Water’s owners believe the regulator is unlikely to agree to their demands.

Last month, the water company’s parent group, Kemble, defaulted on its debt. Kemble’s bonds are now trading at less than 10 per cent of face value, implying that its lenders are also braced for a total writedown.

If they withdraw, it will leave Thames Water seeking new investors and running down its cash reserves.

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