Microsoft and Apple have decided against taking up board seats at OpenAI. The decision comes as regulatory bodies intensify their scrutiny of big tech’s involvement in AI development and deployment.
According to a Bloomberg report on July 10, citing an anonymous source familiar with the matter, Microsoft has officially communicated its withdrawal from the OpenAI board. This move comes approximately a year after the Redmond-based company made a substantial $13 billion investment in OpenAI in April 2023.
In a memo addressed to OpenAI, Microsoft stated: “Over the past eight months we have witnessed significant progress from the newly formed board and are confident in the company’s direction.” The tech giant added, “We no longer believe our limited role as an observer is necessary.”
Contrary to recent reports suggesting that Apple would secure an observer role on OpenAI’s board as part of a landmark agreement announced in June, it appears that OpenAI will now have no board observers following Microsoft’s departure.
Responding to these developments, OpenAI expressed gratitude towards Microsoft, stating, “We’re grateful to Microsoft for voicing confidence in the board and the direction of the company, and we look forward to continuing our successful partnership.”
This retreat from board involvement by major tech players occurs against a backdrop of mounting regulatory pressure. Concerns about the potential impact of big tech on AI development and industry dominance have prompted increased scrutiny from regulatory bodies worldwide.
In June, European Union regulators announced that OpenAI could face an EU antitrust investigation over its partnership with Microsoft. EU competition chief Margrethe Vestager also revealed plans for local regulators to seek additional third-party views and survey firms such as Microsoft, Google, Meta, and ByteDance’s TikTok regarding their AI partnerships.
For now, we conclude that @Microsoft has not acquired control of @OpenAI under
Merger Regulation.
We will keep monitoring the relationships between all key players in the AI sector, incl. Microsoft & OpenAI.
— Margrethe Vestager (@vestager) June 28, 2024
The decision by Microsoft and Apple to step back from board positions at OpenAI could be interpreted as a strategic move to mitigate potential regulatory challenges. By maintaining a more arm’s length relationship with the AI firm, these tech giants may be attempting to avoid accusations of undue influence or control over AI development.
Alex Haffner, a competition partner at Fladgate, said:
“It is hard not to conclude that Microsoft’s decision has been heavily influenced by the ongoing competition/antitrust scrutiny of its (and other major tech players) influence over emerging AI players such as Open AI.
Microsoft scored a ‘win’ in this regard at the end of June when the EU Commission announced it was dropping its merger control probe of Microsoft and Open AI, an investigation originally announced when Open AI re-shaped its board structure at the time of Sam Altman’s on-off departure from the company.
However, the Commission confirmed it was still looking at the competitive impact of the broader arrangements between the parties and it is clear that regulators are very much focussed 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.”
As AI continues to play an increasingly critical role in technological advancement and societal change, the balance between innovation, competition, and regulation remains a complex challenge for both industry players and policymakers.
The coming months will likely see continued scrutiny of AI partnerships and investments, as regulators worldwide grapple with the task of ensuring fair competition and responsible AI development.
(Photo by Andrew Neel)
See also: Nvidia: World’s most valuable company under French antitrust fire
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