OpenAI’s board to no longer have Microsoft oversight

Microsoft has decided to relinquish its observer seat on OpenAI’s board, and Apple will also forgo the opportunity to appoint an executive to a similar role due to increased regulatory scrutiny regarding the relationships between large tech companies and AI startups.

This decision was revealed in a letter from Microsoft to OpenAI, initially reported by the Financial Times. The observer seat, which lacked voting rights in board decisions, was vacated “effective immediately.”

Microsoft, the primary financial supporter of OpenAI with a $13 billion investment, expressed confidence in the progress of OpenAI’s newly formed board. This board was established following the notable dismissal and subsequent reinstatement of CEO Sam Altman.

Microsoft cited OpenAI’s positive trajectory, emphasising its commitment to safety and a robust corporate culture, as reasons for stepping down from the observer role. The tech giant has concluded that its limited observer position was no longer necessary.

However, it is believed that Microsoft’s decision was influenced by concerns from competition regulators. In the UK, the Competition and Markets Authority (CMA) is investigating whether the partnership between Microsoft and OpenAI constitutes an “acquisition of control.” Similarly, the US Federal Trade Commission (FTC) is scrutinising the partnership. While the European Commission opted not to conduct a formal merger review of Microsoft’s investment in OpenAI, it is examining exclusivity clauses in their agreement.

An OpenAI spokesperson indicated that the company is developing a new method to keep strategic partners like Microsoft and Apple informed and engaged, alongside other financial investors.

OpenAI plans to conduct regular stakeholder meetings to share updates on its mission and enhance collaboration on safety and security. T

Under this new strategy, OpenAI will eliminate board observer roles altogether, precluding Apple from appointing an executive to such a position. It was recently reported that Apple intended to place Phil Schiller, head of its app store, on the OpenAI board as part of a June agreement. Apple has not yet commented on this development.

Why is this important?

The scrutiny of AI investments by regulators extends beyond Microsoft and OpenAI. The FTC is also examining partnerships between AI company Anthropic, which developed the Claude chatbot, and tech giants Google and Amazon. In the UK, the CMA is investigating Amazon’s and Anthropic’s collaborations, as well as Microsoft’s partnerships with AI firms Mistral and Inflection AI.

Overall, this regulatory scrutiny underscores the increasing vigilance of authorities in monitoring the burgeoning relationships between major technology companies and AI startups to prevent potential monopolistic control and ensure fair competition.

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