Microsoft ditches OpenAI board observer seat amid regulatory scrutiny
Microsoft took a non-voting, observer position on OpenAI’s board in November last year after OpenAI CEO Sam Altman took back the reins of the company, which operates the generative AI chatbot ChatGPT.
The seat meant it could attend OpenAI’s board meetings and access confidential information but had no voting rights on matters including electing or choosing directors.
The observer seat and Microsoft’s more than $10 billion investment in OpenAI have triggered unease among antitrust watchdogs in Europe, Britain and the US over how much control it exerts over OpenAI.
Microsoft cited OpenAI’s new partnerships, innovation and growing customer base since Altman’s return to the startup for giving up its observer seat.
“Over the past eight months we have witnessed significant progress by the newly formed board and are confident in the company’s direction. Given all of this we no longer believe our limited role as an observer is necessary,” it said in a letter to OpenAI dated July 9.
EU antitrust regulators last month said the partnership would not be subjected to the bloc’s merger rules because Microsoft does not control OpenAI, but they would instead seek third-party views on the exclusivity clauses in the agreement.
In contrast, the British and US antitrust watchdogs continue to have concerns as well as questions about Microsoft’s influence over OpenAI and the latter’s independence.
Microsoft and OpenAI are increasingly competing to sell AI technology to enterprise customers, aiming to generate revenue and demonstrate their independence to regulators to address antitrust concerns.
Additionally, Microsoft is expanding its AI offerings on the Azure platform and has hired Inflection’s CEO to head its consumer AI division, a move widely interpreted as an effort to diversify beyond OpenAI.
Microsoft's role in attending OpenAI's board meetings as an observer, due to its significant investment, has often led to discussions about its influence in the tech business sector, particularly in relation to OpenAI's ChatGPT and other generative AI technologies.
As Microsoft strengthens its AI offerings on Azure and hires new talents, such as Inflection's CEO to lead its consumer AI division, questions about the company's reliance on OpenAI and its ability to innovate independently in the tech industry continue to arise.
