Microsoft And Apple Both Gives Up Their Position From OpenAI's Board Observer Seat

The Two Tech giants Microsoft and Apple on Wednesday decides to exit from OpenAI’s board observer position. Basically, this happened because OpenAI has drawn regulatory scrutiny on both sides of the Atlantic. The Two tech giants reasoned that it was not necessary after the AI start-up’s governance had improved significantly in the past eight months.

Microsoft has decided to give up its position as a board observer at OpenAI, which has faced scrutiny from regulators in the US and Europe. They stated that this step is no longer necessary as OpenAI’s governance has significantly improved over the past eight months.

Apple, which recently announced plans to integrate OpenAI’s ChatGPT chatbot into its devices, was expected to take on the board observer role at OpenAI. However, according to a report in the Financial Times citing a knowledgeable source, Apple has decided not to pursue this role. Apple did not respond to requests for comment.

An OpenAI spokesperson mentioned that the company plans to adopt a new approach to engagement. This includes holding regular meetings with key partners like Microsoft and Apple, as well as with investors such as Thrive Capital and Khosla Ventures. Last November, Microsoft assumed a non-voting observer role on OpenAI’s board, following CEO Sam Altman’s return to lead the company, which oversees the generative AI chatbot ChatGPT.

The seat allowed Microsoft to attend OpenAI’s board meetings and access confidential information but did not grant voting rights on matters like electing directors. The observer seat, along with Microsoft’s investment of over $10 billion in OpenAI, raised concerns among antitrust regulators in Europe, the UK, and the US about the extent of its influence over OpenAI.

Microsoft mentioned that OpenAI’s new partnerships, innovations, and expanding customer base since Sam Altman returned to lead the startup were reasons for relinquishing its observer seat.

“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,” it said in a letter to OpenAI dated July 9.

EU antitrust regulators recently stated that they would not apply their merger rules to the partnership between Microsoft and OpenAI because Microsoft does not control OpenAI. Instead, they plan to gather opinions from third parties regarding the exclusivity clauses in the agreement.

However, British and US antitrust regulators remain concerned and have questions about Microsoft’s influence over OpenAI and the independence of the latter. Microsoft and OpenAI are both increasingly competing in the market to sell AI technology to businesses. They are aiming to generate revenue and demonstrate their independence to regulators to address antitrust concerns.

Furthermore, Microsoft is expanding its AI services on the Azure platform and has appointed the CEO of Inflection to lead its consumer AI division. This move is widely seen as an effort by Microsoft to diversify its AI offerings beyond its collaboration with OpenAI.