Microsoft hired the ex-CEO of OpenAI. Why his staff wants to join him.

OpenAI named ex-Twitch boss Emmett Shear as interim CEO, while outgoing chief Sam Altman is set to join backer Microsoft in a surprise turn of events for the startup at the heart of an artificial intelligence boom.

The appointments, settled late at night on Sunday, followed Mr. Altman’s abrupt departure just days earlier as CEO of the ChatGPT maker, and ended speculation that he could return.

Mr. Shear’s appointment has not ended the turmoil at the company. OpenAI’s staff have threatened to quit the artificial intelligence startup and join Mr. Altman at Microsoft, according to a letter seen by Reuters, unless the board resigns.

Apart from chief technology officer Mira Murati, chief data scientist Ilya Sutskever, and chief operating officer Brad Lightcap, about 500 members of OpenAI staff said they would resign, a person familiar with the matter told Reuters.

OpenAI did not immediately respond to a Reuters request for comment.

In a statement on the social media platform X, Mr. Shear dismissed speculation that OpenAI’s board ousted Mr. Altman because of a spat over the safety of powerful AI models. Mr. Altman was a founding co-chair of the startup that kicked off the generative AI craze a year ago by releasing ChatGPT, a chatbot that became one of the world’s fastest-growing software applications.

Mr. Shear vowed to open an investigation into the firing, consider new governance for OpenAI, and continue its path of making available technology like its viral chatbot.

“I’m not crazy enough to take this job without board support for commercializing our awesome models,” Mr. Shear said, adding: “OpenAI’s stability and success are too important to allow turmoil to disrupt them like this.”

Mr. Shear co-founded Twitch and had stepped down from the Amazon.com-owned live video streaming platform earlier this year.

OpenAI dismissed Mr. Altman on Friday following a “breakdown of communications,” according to an internal memo seen by Reuters.

Microsoft CEO Satya Nadella said in posts on X that Mr. Altman would head a new research group inside the software maker, along with other departing OpenAI colleagues such as outgoing president Greg Brockman who quit following Altman’s ouster.

Microsoft has invested billions of dollars in OpenAI and staked its future on the startup, releasing what it called AI copilots to business customers based on OpenAI’s technology.

On the morning of Nov. 20, shares in Microsoft traded up nearly 2% as it appeared to walk off with OpenAI’s crown jewels while aiming to stabilize OpenAI, keeping key talent out of the hands of rivals including Alphabet’s Google and Amazon.com.

“AI is a big opportunity for, and potential threat to, incumbent technology leaders so Microsoft will be delighted to be able to benefit from Altman’s knowledge and vision and prepare itself for a new major era of technological change,” said Russ Mould, investment director at AJ Bell.

Microsoft had supported a return by Mr. Altman to the startup, according to sources, a move that seemed likely only hours prior to the Monday announcements. Teasing his expected reconciliation with OpenAI’s board, Mr. Altman had posted an image of himself on X on Sunday wearing an OpenAI guest badge with the caption: “first and last time i ever wear one of these.”

OpenAI researchers have viewed Microsoft’s vast reserves of computing power as essential to the development of superintelligent machines. Mr. Nadella and Mr. Shear both said their companies remained committed to their partnership, while resources would go to Mr. Altman’s new group at Microsoft as well.

“We look forward to moving quickly to provide them with the resources needed for their success,” Mr. Nadella said.

In a separate post on X, Mr. Altman shared Mr. Nadella’s message with the words, “the mission continues.”

The decision not to reinstate Mr. Altman as OpenAI’s chief confounded efforts by investors and employees to steady the startup’s path. They feared a mass exodus of talent and its impact on an upcoming $86 billion share sale.

Shortly after the internal announcement of Mr. Shear’s appointment, distraught employees “streamed out” of OpenAI headquarters in San Francisco, The Information reported.

Dozens of staffers internally announced they were quitting the company on Sunday, according to the report, citing a person with knowledge of the situation. Several leaders of the startup posted on X on Nov. 20: “OpenAI is nothing without its people.”

Some of the recently departed researchers, such as Szymon Sidor, are joining the new effort at Microsoft, OpenAI’s now-former President Mr. Brockman said in a post on X.

Long in conflict has been OpenAI’s mission to build technology to benefit humanity, and that of its investors who have bankrolled the effort expecting a financial return, said analyst Richard Windsor of Radio Free Mobile.

“This weekend was simply the detonation of a bomb that has been waiting to go off,” he said.

Governing OpenAI is a non-profit. Its four-person board as of Nov. 19 consists of three independent directors holding no equity in OpenAI and its chief scientist, Mr. Sutskever.

“I deeply regret my participation in the board’s actions. I never intended to harm OpenAI. I love everything we’ve built together and I will do everything I can to reunite the company,” Mr. Sutskever said in a post on X.

This story was reported by Reuters. Akash Sriram contributed from Bengaluru, India.