Stability AI in Turmoil, CEO Under Pressure as Possible Sale Looms

In the wake of calls for CEO Emad Mostaque to step down and company VPs leaving the firm over its use of copyrighted content, UK-based AI image developer Stability AI may be looking for a buyer, according to a Wednesday report by Bloomberg. The company is behind the popular Stable Diffusion generative artificial intelligence model, which added video features last week.

Bloomberg said that American technology investment company Coatue Management sent a letter to Stability AI in October, requesting details on top executives’ pay, including Mostaque. Coatue questioned Mostaque’s leadership, saying he had prompted several senior managers to leave.

While no one has come forward to accept Stability’s ownership invitation, two companies that have surfaced as possible buyers are AI marketing tool developer Jasper and Canadian AI developer Cohere, according to a report by data analytics site PYMNTS.

Stability AI has not yet responded to Decrypt’s request for comment.

Launched in August 2022, Stable Diffusion uses generative AI to create images based on user prompts. According to PYMNTS, Coatue valued Stability AI at $1 billion at the time.

Like Midjourney and Dall-E, Stable Diffusion has been controversial, as such tools have been used to create AI-generated deepfakes of world leaders and events.

In September, Stability and Cohere signed onto the Biden Administration’s pledge to develop AI safely. Stability also participated in the UK Safety Summit in Bletchley Park in Buckinghamshire, England, in November. At the summit, 29 countries and the European Union signed a declaration to clamp down on unregulated AI development. But while Stability signed the pledge, the company’s stance on what constitutes fair use led one of its senior executives to quit the company publically.

Earlier this month, Stability’s VP of Audio, Ed Newton-Rex, resigned over the company’s justification for training AI models with copyrighted material.

“I’ve resigned from my role leading the Audio team at Stability AI because I don’t agree with the company’s opinion that training generative AI models on copyrighted works is ‘fair use,’” Newton-Rex said on Twitter.

In an interview with Decrypt, Newton-Rex said his decision to leave Stability and call out the practice of using copyrighted material without permission was to bring attention to an industry-wide issue.

Newton-Rex pointed to a 22-page comment on generative AI that Stability AI submitted to the U.S. Copyright Office, calling emerging technology “an acceptable, transformative, and socially beneficial use of existing content that is protected by fair use.”

“My objection here isn’t really against Stability because Stability takes the same approach that many other generative AI companies in the space take,” Newton-Rex said. “It’s really a cross-industry position that I object to. In effect, I was resigning from a whole group of companies who take the same approach.”

Edited by Ryan Ozawa.