OpenAI Saga, Apple Card Changes, SVB UK Rescue, Embedded Insurance: How Failures Unlocked Partnerships

As we approach the final days of the year, it's only natural to reflect on the notable developments that have shaped the past twelve months. The buzz about artificial intelligence (AI) has undeniably made a remarkable shift and its advancement is? impacting every aspect of our lives, yet the broader landscape has been marked by a mix of global political, economic, and personal uncertainties.

The overarching narrative of the year seems to be dominated by an atmosphere of unpredictability. The world has grappled with multifaceted challenges: military conflicts, environmental changes, economic pressure creating an environment where companies carefully are reconsidering their market positioning and in that respect the strategic partnerships topic has been broadly elevated.

Amidst the complex landscape and economic fluctuations, it becomes inevitable that the narrative of partnerships is not a linear one. In the shadow of every successful collaboration there are many failures. And this is where I will focus this edition to the Unlocked Partnerships Newsletter.

Microsoft Seized the Moment by Outmanoeuvring the OpenAI Board

There is no other place to start but with the end of year drama at OpenAI and how their strategic partner Microsoft leveraged the situation to gain even stronger influence over their operation. On November 17, Microsoft finds itself blindsided by the firing of OpenAI CEO Sam Altman, learning of the decision only a minute before the world becomes aware. This abrupt shift prompts OpenAI to release a statement signalling Altman's departure and the resignation of Greg Brockman as chair. In response, Microsoft issues a reassuring statement, expressing its long-term commitment to OpenAI, emphasising the continuation of their partnership in advancing the next era of artificial intelligence.

The aftermath sees Microsoft taking a more active role in the unfolding narrative. On November 19, the tech giant announced the hiring of both Altman and Brockman to lead a new research unit, reinforcing its dedication to advancing AI research and development. Altman, holding a Microsoft badge, tweets that "the mission continues," signalling a seamless transition into a new phase. This move aligns with Microsoft's strategic interest in harnessing the expertise of key figures from OpenAI to further its own endeavours in the AI landscape.

As the turbulence persists, the internal dissent becomes palpable, with an overwhelming majority of OpenAI's employees signing an open letter urging the board to resign. Despite the chaos, Microsoft maintains its support for OpenAI, and eventually, on November 29, Altman is officially reinstated as CEO, Brockman as president, and Microsoft gains a non-voting observer seat on the board. Altman's emphasis on exploring governance changes, including the potential shift away from nonprofit control, underscores the intricate interplay between OpenAI and its corporate ally, Microsoft, which will undoubtedly have a lasting impact on the global AI landscape.

Changing Partnerships: Apple Could Replace Goldman Sachs With Chase

Let’s move from one Big Tech player to another, with Apple building their wallet capabilities, even if not surprising this news will have significant ramifications. Apple's separation from Goldman Sachs as its primary financial services partner is underway, offering a glimpse into the tumultuous partnership that began in 2019 with the launch of the Apple Card.?

The collaboration expanded into savings accounts and contributed to Apple's "buy now, pay later" service. However, engineering issues, customer complaints, and financial losses strained the partnership. Goldman Sachs, in line with its strategy shift away from consumer businesses, seeks an exit from its deal with Apple, which isn't set to expire for at least another five years.

As Apple navigates the complexities of parting ways with Goldman Sachs, attention turns to potential replacements. While names like American Express have been publicly discussed, JPMorgan Chase emerges as a frontrunner. Already deeply involved with Apple and the compatibility of Chase's MasterCard network with the Apple Card, makes them a likely candidate. No doubt there will be more twists and turns for the transition which highlights the dynamic of the evolving landscape of partnerships in the tech and finance sectors.

UK Authorities and HSBC Join Hands for Swift and Effective Measures

This year spent a lot of time on how governments and businesses can collaborate and there is one example of how with the right framework and urgency to act, results can be achieved. In March 2023, Silicon Valley Bank (SVB) faced a significant setback, becoming the largest US bank to fail since the 2008 global financial crisis. The repercussions extended to its subsidiary in the UK, Silicon Valley Bank UK, which exhibited signs of distress, raising concerns about its ability to weather the storm.?

Faced with the looming threat of disruption, the UK authorities intervened, utilising the resolution process, a safety mechanism established since 2009, to manage the situation without resorting to taxpayer funds. In a strategic move, Silicon Valley Bank UK's business was transferred to the more robust HSBC, ensuring the continuity of services for its customers without financial burden of the UK taxpayers.

The uniqueness of banks in the financial landscape is underscored, emphasising their integral role in essential functions that impact individuals, companies, and public services. Banks' interconnectedness and their critical role for the broader economy required urgent collaboration between the public and private entities to avoid a bigger disaster.

Allianz Lawsuit Won't Deter Revolut's Focus on Insurance Expansion

Talking of disasters and staying in the financial services space, another news caught my eye: a dispute between Allianz Partners and Revolut which put more unwanted headlines for the UK based FinTech. Allianz is embroiled in a legal dispute, seeking ￡10.4 million in damages. The conflict arises from Revolut's alleged breach of an agreement where Allianz provided travel insurance to Revolut customers.?

The lawsuit contends that Revolut violated the contract by transitioning its customers to a different insurance provider and subsequently terminating the agreement, preventing Allianz from invoicing and receiving further payments. The disagreement sheds light on the complexities of partnerships in the evolving landscape of financial services which was supposed to cover 31 markers offering coverage to Premium or Metal Account holders.

How Revolut and Allianz will resolve this dispute will be interested, but one thing is sure the FinTech is making more strategic moves in the embedded insurance space realising the potential these products have for their overall profitability.

The strategic partnership landscape in 2023 has been dynamic and transformative, with significant developments shaping industries and fostering innovation. As we step into the new year, the anticipation for more positive headlines in the partnership space. What standout partnership headlines caught your attention in the past 12 months??