Second AI company in ‘civil war’ over leadership


The chief executive of a second artificial intelligence (AI) start-up is under pressure to quit, a week after Sam Altman won a power struggle at ChatGPT-maker OpenAI.

Emad Mostaque, the founder and boss of British business Stability AI, has been urged to resign by one of its shareholders.

New York-based fund Coatue Management, which led an investment into Stability last year, wrote to the company in October calling for Mr Mostaque to step down, Bloomberg reported.

Coatue is understood to have claimed that Mr Mostaque has overseen a chaotic culture that has led to several leadership departures.

Since the letter was sent, Stability has lost the head of its audio division amid a row over how it approached copyright.

Ed Newton-Rex departed after disagreements with other employees over using artists’ works without payment. He said AI companies were “exploiting creators” by using their works to train their generative models.

Stability has argued that its approach to copyright is “an acceptable, transformative, and socially-beneficial use of existing content that is protected by fair use”.

A spokesman said the company remained founder controlled and stressed that Coatue held only a minority stake, suggesting the letter is unlikely to lead to change.

The company last month reportedly raised around $50m from chip giant Intel and the Stability spokesman added that recent investment in the business “underscores the confidence that investors have”.

Stability, which is valued at $1bn (£790m), is best known for its work on a popular AI image generator known as Stable Diffusion. The tool can generate pictures based on text prompts.

The company has been locked in several legal battles over its technology and has been sued by photography giant Getty Images for copyright breaches. Stability has called for the lawsuit to be dismissed.

News of the rift between Coatue and Stability comes days after a civil war at OpenAI, Stability’s well-funded US rival.

Board members at OpenAI ousted Sam Altman, its co-founder and chief executive, a little over a week ago before he staged a dramatic return with the support of key shareholders and hundreds of staff.

The tumult at OpenAI has raised questions over the governance of AI start-ups, amid calls from world leaders including Rishi Sunak for tighter regulation of the sector.

Separately, Stability confirmed that it had been approached by rivals about a potential takeover or merger but insisted it had rebuffed approaches.

A spokesman said: “While several parties have expressed interest in the purchase of Stability, we are not trying to sell the company and are focused on releasing leading models.”

A Coatue spokesman declined to comment.

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