Microsoft has unexpectedly pulled out of its observer role on OpenAI’s board. In a letter to OpenAI, Microsoft’s deputy general counsel, Keith Dolliver, stated the move was due to the significant progress made by OpenAI’s newly formed board, implying a vote of confidence in the company’s direction. Microsoft’s non-voting observer seat was established in November 2023 to protect their investment interests in the AI powerhouse, amidst executive level turbulence at OpenAI.
However, this latest boardroom reshuffle has industry insiders speculating that the underlying reason may be regulatory pressure. With increased scrutiny from US and European regulators regarding Big Tech’s investments in AI startups, it seems plausible that this move by Microsoft could be a response to avoid antitrust scrutiny. Both the US Federal Trade Commission (FTC) and the European Commission have started examining these investments and potential antitrust issues.
Despite Microsoft’s significant investment in OpenAI (over $10 billion since early 2023), which enabled early access to leading-edge AI models, the withdrawal from the observer position on the board doesn’t mean an end to their partnership. Microsoft continues to be a crucial financial and technological resource for OpenAI.
OpenAI seems to be shifting towards a new communication strategy with key stakeholders, including Microsoft. Rather than board representation, they plan to host regular meetings with key investors, ensuring transparency and reinforcing their company’s independence.
Furthermore, Apple is also reported to decline an observer role on OpenAI’s board. While Apple has integrated OpenAI’s model into its devices as part of their AI initiative, regulatory pressures and data privacy issues might be factors in their decision against taking up a board seat.
Overall, the current trend among AI companies appears to be a proactive distancing from board representation, possibly as a strategic response to growing regulatory scrutiny.
