Microsoft and Apple abandon OpenAI board seats amid regulatory scrutiny

Microsoft and Apple have withdrawn from their board observer seats at OpenAI in response to global regulatory concerns about the relationships between big tech firms and influential AI start-ups.

Microsoft, which has invested $13 billion in OpenAI, informed the ChatGPT maker that its resignation was “effective immediately” less than nine months after assuming the role. Apple, having recently announced a partnership with OpenAI to integrate its chatbots into its products, will not proceed 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 with tech giants that have funded them with billions of dollars. Regulators worry that these alliances could reinforce Silicon Valley’s dominance over AI technology, hinder competition, and amplify their power and influence.

Last December, the UK’s Competition and Markets Authority (CMA) expressed its concerns, describing the development of AI as “unrivalled in economic history” and emphasising that competition between developers is crucial for “guiding the market towards positive outcomes for people and businesses.”

The CMA is currently considering whether Microsoft’s partnership with OpenAI could be classified as a merger, similar to Amazon’s tie-up with Anthropic. It has invited public comments ahead of a potential preliminary investigation.

The regulator is scrutinising the “multi-year, multi-billion dollar investment, collaboration in technology development, and exclusive provision of cloud services by Microsoft to OpenAI” to determine if Microsoft exerts material influence over the business. By relinquishing the board seat, Microsoft aims to address one of the main regulatory concerns regarding its investment.

The European Commission also reviewed the deal, concluding that the observer seat did not alter 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 large tech firms and generative AI start-ups.

OpenAI experienced significant upheaval in November last year when CEO Sam Altman was fired and rehired over a weekend amid a dispute over the company’s strategic direction. Following this turmoil, Microsoft took an observer role on the board. Given its substantial investment, many were surprised Microsoft did not already have a seat.

In a letter, Microsoft stated: “We accepted the non-voting board observer role at a time when OpenAI was in the process of rebuilding its board. This position provided insights into the board’s transitional work without compromising its independence.” With a new board now 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 competition partner at Fladgate, commented: “It is hard not to conclude that Microsoft’s decision has been heavily influenced by the ongoing competition scrutiny of its (and other major tech players’) influence over emerging AI players such as OpenAI. It is clear that regulators are very much focused on the complex web of inter-relationships that big tech has created with AI providers, hence the need for Microsoft and others to carefully consider how they structure these arrangements.”

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