Microsoft Steps Back from OpenAI Board Amid Antitrust Concerns

Microsoft Relinquishes Observer Seat

Microsoft has given up its observer seat on OpenAI’s board to address antitrust regulators’ concerns in the U.S. and UK regarding its control over the AI startup. This move comes amid the rising popularity of generative artificial intelligence.

Apple’s Position

Apple, which recently announced integrating OpenAI’s ChatGPT into its devices, has decided not to take an observer role on OpenAI’s board. This decision was unexpected, as reported by the Financial Times, citing an insider. Apple has not commented on this matter.

New Approach to Stakeholder Engagement

An OpenAI spokesperson mentioned that the company will now engage with stakeholders through regular meetings with strategic partners like Microsoft and Apple, as well as investors such as Thrive Capital and Khosla Ventures. This new approach aims to maintain strong relationships without formal board involvement.

Background on Microsoft’s Involvement

Microsoft initially took a non-voting observer position on OpenAI’s board in November after Sam Altman resumed leadership of the company. This role allowed Microsoft to attend board meetings and access confidential information without voting rights on key decisions. Microsoft’s significant investment of over $10 billion in OpenAI raised concerns among antitrust authorities about the extent of its influence.

Reasons for Stepping Down

In a letter to OpenAI dated July 9, Microsoft cited the company’s progress and growing customer base as reasons for relinquishing its observer seat. The letter stated, “Over the past eight months we have witnessed significant progress by the newly formed board and are confident in the company’s direction. Given all of this, we no longer believe our limited role as an observer is necessary.”

Antitrust Implications

The European Union’s antitrust regulators recently stated that Microsoft’s partnership with OpenAI would not be subject to the bloc’s merger rules, as Microsoft does not control OpenAI. However, they would seek third-party views on the exclusivity clauses in the agreement. In contrast, British and U.S. antitrust authorities remain concerned about Microsoft’s influence over OpenAI and the latter’s independence.

An antitrust lawyer, speaking anonymously due to the sensitivity of the matter, suggested that Microsoft’s decision to drop its observer seat makes it harder for regulators to prove control over OpenAI.

Competition and Future Directions

Microsoft and OpenAI continue to compete in selling AI technology to enterprise customers. Both companies aim to generate revenue and demonstrate their independence to address antitrust concerns. Microsoft is also expanding its AI offerings on the Azure platform and has hired Inflection’s CEO to lead its consumer AI division, signaling a move to diversify beyond OpenAI.

Conclusion

By stepping back from its observer role on OpenAI’s board, Microsoft is addressing regulatory concerns and reinforcing the independence of both companies. This strategic move aims to ease antitrust pressures while allowing continued collaboration and competition in the rapidly evolving AI industry.