Microsoft and Apple back away from OpenAI board

Microsoft and Apple have decided against taking board seats at OpenAI, as regulatory bodies intensify their examination of big tech’s involvement in AI development and deployment. According to a Bloomberg report on July 10, citing an anonymous source, Microsoft officially communicated its withdrawal from the OpenAI board. This decision comes about a year after the company invested $13 billion in OpenAI in April 2023.

In a memo 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 Apple would secure an observer role on OpenAI’s board following a landmark agreement in June, OpenAI will now have no board observers after Microsoft’s departure.

OpenAI expressed gratitude to 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 amid increasing regulatory pressure. Concerns about big tech’s impact on AI development and industry dominance have prompted heightened 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. The decision by Microsoft and Apple to step back from board positions at OpenAI could be seen 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 trying to avoid accusations of undue influence or control over AI development.

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/antitrust scrutiny of its (and other major tech players) influence over emerging AI players such as OpenAI. 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 OpenAI, an investigation originally announced when OpenAI reshaped its board structure during Sam Altman’s on-off departure from the company.

However, the Commission confirmed it was still examining the competitive impact of the broader arrangements between the parties. Regulators are clearly focused 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 a crucial role in technological advancement and societal change, the balance between innovation, competition, and regulation remains a complex challenge for 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.