Microsoft and Apple Withdraw from OpenAI Board Seats Amid Regulatory Scrutiny
Microsoft and Apple have opted not to take up board seats at OpenAI, a decision influenced by the increasing scrutiny from regulatory bodies regarding big tech’s role in AI development and deployment.
A Bloomberg report dated July 10, citing an anonymous source, revealed that Microsoft has officially communicated its decision to withdraw from the OpenAI board. This decision comes roughly a year after the company made a significant $13 billion investment in OpenAI in April 2023.
In a memo addressed 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 memo continued, “We no longer believe our limited role as an observer is necessary.”
Contrary to previous reports suggesting that Apple would assume an observer role on OpenAI’s board as part of a major agreement announced in June, it now appears that OpenAI will have no board observers following Microsoft’s departure.
OpenAI expressed gratitude towards 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 by major tech players from board involvement is happening against a backdrop of growing regulatory pressure. Concerns about the impact of big tech on AI development and industry dominance have prompted increased scrutiny from regulatory bodies worldwide.
In June, European Union regulators announced that OpenAI could face an 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 distant 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 re-shaped its board structure at the time of Sam Altman’s on-off departure from the company.
However, the Commission confirmed it was still looking at the competitive impact of the broader arrangements between the parties and it is clear that regulators are very much 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 an increasingly critical role in technological advancement and societal change, balancing innovation, competition, and regulation remains a complex challenge for both industry players and policymakers.
The coming months are likely to see continued scrutiny of AI partnerships and investments, as regulators worldwide grapple with the task of ensuring fair competition and responsible AI development.
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