Apple and Microsoft Leave their Observer Positions on the OpenAI Board

By Consultants Review Team Wednesday, 10 July 2024

Microsoft has resigned from its board observer position at OpenAI, which has attracted regulatory attention from both sides of the Atlantic. The company claims that this was not required as the governance of the AI start-up has much improved over the previous eight months.

According to the Financial Times, which cited a source with firsthand knowledge of the situation, Apple, opens a new tab, which last month announced introducing OpenAI's chatbot ChatGPT to its devices, will not take the observer post on OpenAI's board despite being widely expected to do so. A request for comment from Apple was not answered.

According to an OpenAI representative, the business will have frequent stakeholder meetings with investors like Thrive Capital and Khosla Ventures as well as strategic partners like Apple and Microsoft as part of a new engagement strategy. In November of last year, Microsoft became an observer on the OpenAI board, with no voting rights, after OpenAI CEO Sam Altman's return to leadership of the ChatGPT generative AI chatbot startup.

With the seat, it was able to observe OpenAI board meetings and have access to private information, but it was not able to vote on issues such as selecting or electing directors. The observer role and Microsoft's over $10 billion investment in OpenAI have caused antitrust regulators in the U.S., Europe, and Britain to become uneasy about the amount of influence Microsoft has over OpenAI.

In exchange for relinquishing its observer position, Microsoft pointed to OpenAI's new collaborations, inventiveness, and expanding clientele since Altman's return to the business.

As part of a new engagement approach, an OpenAI spokesman stated that the company will host regular stakeholder meetings with investors such as Thrive Capital and Khosla Ventures, as well as strategic partners like Apple and Microsoft. Following OpenAI CEO Sam Altman's return to leadership of the ChatGPT generative AI chatbot business in November of last year, Microsoft joined the OpenAI board as an observer with no voting rights.

Because Microsoft does not control OpenAI, EU antitrust officials stated last month that the cooperation would not be governed by the bloc's merger laws. Instead, they would seek third-party opinions on the exclusivity provisions in the deal.

On the other hand, the US and UK antitrust authorities are still worried about Microsoft's power over OpenAI and the latter's independence. In an effort to make money and convince authorities that they are independent enough to handle antitrust issues, Microsoft and OpenAI are being more and more competitive in the market to sell AI technology to business clients. Furthermore, Microsoft is diversifying beyond OpenAI, as seen by the hiring of Inflection's CEO to lead its consumer AI group and the company's expansion of its AI capabilities on the Azure platform.

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