Microsoft has given up its observer role on the board of OpenAI, while Apple will also not take on a similar position. This comes against the backdrop of growing regulatory scrutiny of large tech companies' investments in AI start-ups by global authorities.
Microsoft, which has invested $13 billion in the maker of the generative AI chatbot ChatGPT, stated in a letter to OpenAI that the withdrawal from the board role would be "effective immediately." Apple was initially supposed to take an observer role on the OpenAI board as part of a deal to integrate ChatGPT into the devices of the iPhone manufacturer, but will not do so, according to a person familiar with the matter. Apple declined to comment.
Instead, OpenAI will hold regular meetings with partners such as Microsoft and Apple, as well as investors like Thrive Capital and Khosla Ventures. This is part of a "new approach to informing and engaging key strategic partners" led by Sarah Friar, the former head of Nextdoor, who was hired last month as the first Chief Financial Officer, a spokesperson for OpenAI said.
This step is also taking place as antitrust authorities in the EU and the USA investigate the partnership between Microsoft and OpenAI amid broader concerns about competition in the rapidly growing AI sector.
Microsoft accepted a non-voting role on the board following the chaos that engulfed OpenAI last year when CEO Sam Altman was abruptly dismissed from the board and reinstated a few days later. The attempted board coup threatened OpenAI's valuation and, consequently, Microsoft's multi-billion-dollar investment in the company.
This position provided insights into the activities of the board without compromising its independence," wrote Keith Dolliver, Deputy General Counsel of Microsoft, in a letter to OpenAI. Since then, "we have witnessed significant progress by the newly formed board and are confident in the direction of the company." Therefore, Microsoft's role on the board is no longer "necessary.
The partnership with Microsoft was crucial to the success of OpenAI. The start-up relies on Microsoft for computing power and cloud storage worth billions of dollars. Microsoft CEO Satya Nadella played a key role during the boardroom chaos at OpenAI in November.
The investment in OpenAI has also given Microsoft an early lead in the race for generative AI. The company stated in April that it is struggling to keep up with the demand for its AI services, which have helped accelerate the revenues of its Azure cloud computing platform over the past three quarters.
Microsoft does not possess a traditional equity stake in the start-up. Instead, it is entitled to a share of the profits from a subsidiary of OpenAI up to a certain limit.
According to the website of OpenAI, "it remains a fully independent company governed by the OpenAI Nonprofit.
**Microsoft and OpenAI have downplayed their connections as antitrust concerns have increased.**
The European Commission stated in June that it is considering the possibility of an antitrust investigation into the collaboration after announcing that it would not initiate an investigation under merger control regulations. The Federal Trade Commission in the USA has also begun examining investments by large technology companies such as Microsoft, Amazon, and Google in generative AI start-ups.
A source familiar with the matter at the FTC said that the move is 'unlikely to address the agency's concerns.'
