Key Points
- Microsoft Relinquishes Observer Role: Microsoft has given up its non-voting observer seat on OpenAI’s board due to improved governance at the AI start-up.
- Apple Declines Observer Position: Despite expectations, Apple will not assume the observer role on OpenAI’s board.
- New Engagement Strategy: OpenAI will now hold regular stakeholder meetings with strategic partners and investors.
- Regulatory Scrutiny: Microsoft’s observer role and investment in OpenAI have raised antitrust concerns in Europe, the UK, and the US.
- EU Antitrust Ruling: EU regulators state that Microsoft does not control OpenAI but will review exclusivity clauses.
- Ongoing Concerns: UK and US regulators continue to have questions about Microsoft’s influence over OpenAI.
- Competitive Landscape: Microsoft and OpenAI are competing to sell AI technology to enterprise customers while demonstrating their independence.
- Expansion of AI Offerings: Microsoft is expanding its AI offerings on Azure and has hired Inflection’s CEO to lead its consumer AI division.
Microsoft has relinquished its board observer seat at OpenAI, a position that had drawn regulatory scrutiny on both sides of the Atlantic. The tech giant stated that the AI start-up’s governance had significantly improved over the past eight months, rendering the role unnecessary.
Apple Declines Observer Position
Apple, which recently announced the integration of OpenAI’s chatbot ChatGPT into its devices, was widely expected to take over the observer role. However, according to the Financial Times, Apple has decided against assuming this position. An Apple spokesperson did not respond to requests for comment.
New Engagement Strategy by OpenAI
An OpenAI representative revealed that the company will adopt a new engagement strategy by hosting regular stakeholder meetings with strategic partners like Microsoft and Apple, as well as investors such as Thrive Capital and Khosla Ventures.
Background on Microsoft’s Observer Role
Microsoft had initially taken a non-voting, observer position on OpenAI’s board in November of last year after OpenAI CEO Sam Altman resumed leadership of the company, which operates the generative AI chatbot ChatGPT.
This observer seat allowed Microsoft to attend board meetings and access confidential information without voting rights on decisions, including the election or selection of directors.
Regulatory Concerns and Reactions
The observer role, coupled with Microsoft’s substantial $10 billion investment in OpenAI, has raised concerns among antitrust authorities in Europe, the UK, and the US regarding the extent of Microsoft’s control over OpenAI.
Microsoft’s Justification for Exiting
Microsoft cited OpenAI’s new partnerships, innovations, and growing customer base as reasons for relinquishing its observer seat.
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“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,” Microsoft stated in a letter to OpenAI dated July 9.
EU Antitrust Ruling and Ongoing Concerns
EU antitrust regulators recently declared that the partnership would not be subject to the bloc’s merger rules since Microsoft does not control OpenAI. However, they will seek third-party opinions on the exclusivity clauses within the agreement.
Also Read: EU warns Apple against breaching digital competition rules amid Big Tech regulatory efforts
Meanwhile, British and US antitrust authorities continue to express concerns about Microsoft’s influence over OpenAI and the latter’s independence.
Competitive Landscape and Expansion Plans
As Microsoft and OpenAI increasingly compete to sell AI technology to enterprise customers, they aim to generate revenue and demonstrate their independence to alleviate antitrust concerns.
Additionally, Microsoft is expanding its AI offerings on the Azure platform and has hired Inflection’s CEO to lead its consumer AI division, signalling a move to diversify beyond OpenAI.
