However, a huge amount of profit is effectively transferred from third party investors to the CEO or management team. They go from probably a few percent of the profits to spend as they wish to controlling the distribution of perhaps half
Can’t this be fixed by just stating that the windfall is distributed by shareholders on a pro rata basis?[1]
Also, if I’m understanding Appendix II of the original report correctly, it seems like the proposals all involve distributing the windfall to a trust which the AI developer does not have control of. I guess your point is that e.g. Open AI might distribute its windfall to “the trust for buying Sam Altman yachts” or something, but I think it is per se incorrect to describe the CEO as having control over spending the windfall?
Can’t this be fixed by just stating that the windfall is distributed by shareholders on a pro rata basis?
That would be an improvement in terms of CEO race incentives yes, although it would reduce the distinctiveness of the clause significantly. For shareholders who already give to charity, fungibility of money means this might be simply equivalent to no Clause for them.
Also, if I’m understanding Appendix II of the original report correctly, it seems like the proposals all involve distributing the windfall to a trust which the AI developer does not have control of.
Yes, I guess here I’m really critiquing ‘what I think attempts to implement the Windfall Clause in practice look like right now’. I’m not aware of any firm which has signed up to a Windfall Clause or similar having actually implemented an associated legally binding trust; even if they intended to do so, the CEO and management team would presumably have a huge amount of discretion about its makeup.
This is a cool point, thanks for making it.
Can’t this be fixed by just stating that the windfall is distributed by shareholders on a pro rata basis?[1]
Also, if I’m understanding Appendix II of the original report correctly, it seems like the proposals all involve distributing the windfall to a trust which the AI developer does not have control of. I guess your point is that e.g. Open AI might distribute its windfall to “the trust for buying Sam Altman yachts” or something, but I think it is per se incorrect to describe the CEO as having control over spending the windfall?
“Fixed” in scare quotes—I’m not sure it’s actually better for the world to have random VCs spending the money than CEOs of AGI companies.
Thanks for the suggestions!
That would be an improvement in terms of CEO race incentives yes, although it would reduce the distinctiveness of the clause significantly. For shareholders who already give to charity, fungibility of money means this might be simply equivalent to no Clause for them.
Yes, I guess here I’m really critiquing ‘what I think attempts to implement the Windfall Clause in practice look like right now’. I’m not aware of any firm which has signed up to a Windfall Clause or similar having actually implemented an associated legally binding trust; even if they intended to do so, the CEO and management team would presumably have a huge amount of discretion about its makeup.