Microsoft and Apple vacate OpenAI board seats due to regulatory scrutiny

Microsoft and Apple have withdrawn from their board seats at OpenAI in response to global concerns about the relationships between major tech companies and influential AI startups.

Microsoft, which has invested $13 billion in OpenAI, informed the ChatGPT maker that his resignation was “effective immediately,” less than nine months after he took on the role. Apple, which recently announced a partnership with OpenAI to integrate its chatbots into its products, will not move forward with its planned board seat, according to the Financial Times.

The world’s leading generative AI companies, including OpenAI, Anthropic, and Mistral, maintain close ties to tech giants that have funded them with billions of dollars. Regulators are concerned that these alliances could strengthen Silicon Valley’s dominance over AI technology, hinder competition and increase their power and influence.

Last December, the UK Competition and Markets Authority (CMA) raised concerns, describing the development of AI as “unprecedented in economic history” and emphasizing that competition between developers is crucial to “moving the market towards positive outcomes for people and businesses.” to lead’.

The CMA is currently considering whether Microsoft’s partnership with OpenAI can be classified as a merger, similar to Amazon’s partnership with Anthropic. It has requested public comment prior to any preliminary investigation.

The regulator is investigating Microsoft’s “multi-year, multi-billion dollar investment, collaboration in technology development and exclusive provision of cloud services to OpenAI” to determine whether Microsoft exerts material influence over the company. By relinquishing its board seat, Microsoft aims to address one of the key regulatory issues surrounding its investment.

The European Commission also reviewed the deal and concluded that the observer seat did not change OpenAI’s independence or Microsoft’s influence over OpenAI, although it is still considering an antitrust investigation.

In the US, the Federal Trade Commission is examining the competitive implications of investments and partnerships between big tech companies and generative AI startups.

OpenAI saw significant turmoil last November when CEO Sam Altman was fired and rehired over a weekend amid a dispute over the company’s strategic direction. After this unrest, Microsoft took on an observer role in the board. Given the significant investments, many were surprised that Microsoft did not yet have a seat.

In a letter, Microsoft stated: “We accepted the role of non-voting observer at a time when OpenAI was rebuilding its governance. This position provided insight into the transition work of the board without compromising independence.” With a new board in place, Microsoft expressed confidence in the company’s direction and concluded that its “limited role as an observer is no longer necessary.”

Alex Haffner, a competitive partner at Fladgate, commented: “It is difficult not to conclude that Microsoft’s decision has been heavily influenced by the ongoing competitive scrutiny of its influence (and that of other major technology players) on emerging AI players such as OpenAI. It is clear that regulators are focusing heavily on the complex web of interrelationships that large technology companies have created with AI providers. Hence the need for Microsoft and others to carefully consider how they structure these arrangements.”