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I think a lot of OpenAI's problem was they botched the launch and users essentially got reduced limits and stupider models. But the basic framing of the tweet is correct - OpenAI reduced sycophancy, and got a ton of complaints encouraging them to re-instate the model.
OpenAI can learn one of two lessons from this:
Sycophancy is terrifying and they should take pains to avoid it; or
A great deal of a model's popularity depends on sycophancy rather than quality
I like to imagine the whole GPT-5 launch from the perspective of a cigarette company.
OpenAI is Philip Morris over here. Realized they make a product that addicts and hurts people. Instead of feeding it, they cut it off. The addicts went insane and OpenAI unfortunately caved.
It might be that the race for AGI gets replaced with the race for market dominance, and major companies stop optimising in the direction of more intelligence. Unlikely I think, but could potentially be good in the Pause AI sense.
Sycophantic models aren’t necessarily less intelligent. Instead, they use their intelligence to model the user and their preferences. E.g. I expect a properly trained GPT-4 > GPT-3 > GPT-2 at sycophancy. So even if labs started optimizing for this, I would expect them still to be incentivized towards scaling up models and capabilities.