Microsoft and Apple have decided to step down from their observer seats on the board of OpenAI. This comes because of the scrutiny by global regulators over Big Tech’s investments in AI startups.
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Microsoft has invested $13 billion in OpenAI. This investment includes providing computing power and cloud storage critical for OpenAI’s operations.
Apple was expected to take up an observer role on OpenAI’s board as part of a deal to integrate ChatGPT into its devices. However this will not proceed as anticipated.
Microsoft announced its withdrawal from its observer role on OpenAI’s board via a letter stating that the withdrawal was effective immediately.
This decision follows a progress made by the newly formed OpenAI board. Apple has decided not to take up the observer role on OpenAI’s board.
OpenAI plans to host regular meetings with partners like Microsoft and Apple as well as investors Thrive Capital and Khosla Ventures.
This new approach aims to keep partners informed and engaged without having them in observer roles on the board.
Sarah Friar, the former Nextdoor CEO has been appointed as OpenAI’s first chief financial officer and will head the new strategy to engage partners and investors.
Both the European Union (EU) and the United States (US) are examining the partnerships between Big Tech companies and AI startups.
The European Commission is exploring the possibility of an antitrust investigation into the Microsoft-OpenAI partnership. This follows a decision not to proceed with a probe under merger control rules.
The Federal Trade Commission (FTC) in the US is scrutinizing investments made by major tech companies including Microsoft, Amazon and Google into generative AI startups.
Microsoft accepted a non-voting observer role on OpenAI’s board to gain insights without compromising the board’s independence.
Microsoft’s deputy general counsel Keith Dolliver stated that the company is now confident in OpenAI’s direction.
Microsoft joined OpenAI’s board as a non-voting observer in November. This move followed a turbulent period for OpenAI, by the abrupt firing and quick reinstatement of CEO Sam Altman.
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Post-crisis in OpenAI restructured its board, which included retaining only one former board member, Adam D’Angelo and appointing new members such as Bret Taylor and former Treasury Secretary Larry Summers.
Microsoft’s Deputy General Counsel, Keith Dolliver highlighted in a letter to OpenAI that the progress made by the new board over the past eight months rendered Microsoft’s observer role unnecessary.
The decision is also seen as a response to growing antitrust scrutiny from regulators in the EU, the US, and the UK who are increasingly concerned about the influence of large tech companies over emerging AI players.
The European Commission has expressed concerns about the agreements between major digital market players and AI developers specifically mentioning the Microsoft-OpenAI partnership.
They are investigating the impacts on market competition. Both the US Federal Trade Commission and the UK’s Competition and Markets Authority are also examining these powerful tech partnerships on competition.
Microsoft has invested approximately $13 billion in OpenAI. Microsoft’s financial support has been important in OpenAI’s rise, which positioned OpenAI as a frontrunner in the AI space.
OpenAI plans to adopt a new approach to inform and engage with partners like Microsoft and Apple and investors such as Thrive Capital and Khosla Ventures. This will include regular meetings to make sure of collaboration on safety and security.
With Microsoft’s departure OpenAI has decided not to have any observer seats on its board. Bloomberg reported that OpenAI was considering giving an observer seat to Apple executive Phil Schiller.
With the new direction, OpenAI will not pursue this plan. The company’s board now includes figures like Adam D’Angelo, Bret Taylor, Larry Summers and added member Paul Nakasone, a former NSA official.
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