Microsoft has removed its observer seat on OpenAI’s board of directors and Apple will no longer be able to appoint an executive to a similar role, amid regulatory scrutiny of Big Tech’s relationship with artificial intelligence startups.
Microsoft, the largest financial backer of the ChatGPT developer, announced the move in a letter to the startup, as first reported by the Financial Times. It said the waiver of the observer role, which does not involve voting on board decisions, was “effective immediately.”
Microsoft said it had seen significant progress from OpenAI’s new board of directors, which was formed after the dramatic firing and reinstatement of chief executive Sam Altman last year. It said OpenAI was heading in the right direction, including a commitment to security and building a “great culture.”
“Given all of this, we no longer believe our limited role as observers is necessary,” said Microsoft, which has invested $13bn (£10.2bn) in OpenAI.
However, Microsoft is understood to have believed the observer role was causing concern among competition regulators. In the UK, the Competition and Markets Authority is reviewing whether the partnership has resulted in “an acquisition of control”, while in the US the Federal Trade Commission is also investigating. Looking at the association.
The European Commission has decided not to conduct a formal review of the merger of Microsoft’s investment in OpenAI, but is examining the exclusivity clauses in the agreement between the companies.
An OpenAI spokesperson said the San Francisco-based startup was establishing a new approach to “informing and engaging key strategic partners” such as Microsoft and Apple, as well as other financial investors.
“Going forward, we will host regular meetings with stakeholders to share progress on our mission and ensure stronger security collaboration. We look forward to continued feedback and advice from these key stakeholders,” the spokesperson said.
OpenAI will no longer have observers on its board under the new approach, ruling out Apple taking on that role. It was reported this month that Apple was willing to place the head of its app store, Phil Schiller, on the board as part of a deal announced in June. Apple has been contacted for comment.
Investments in AI startups are under scrutiny from regulators. In addition to looking at Open AI and Microsoft, the FTC has said it is examining partnerships between Anthropic, the company behind the chatbot Claude, and two big tech companies: Google and Amazon. In the UK, the CMA is also looking at Amazon and Anthropic, as well as Microsoft’s partnerships with Mistral and Inflection AI.
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Alex Haffner, a partner at British law firm Fladgate, said it was “hard not to conclude” that Microsoft’s decision had been influenced by the regulatory environment.
“It is clear that regulators are very focused on the complex web of interrelationships that Big Tech has created with AI providers, hence the need for Microsoft and others to carefully consider how they structure these arrangements going forward,” he said.
