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Microsoft has given up its observer seat on OpenAI's board, while Apple is not going to take an identical position amid increasing scrutiny by global regulators over major tech corporations' investments in AI startups.
Microsoft, which has invested $13 billion within the maker of generative AI chatbot ChatGPT, said in a letter to OpenAI that his withdrawal from the board role can be “effective immediately.”
Apple was also scheduled to take an observer role on OpenAI's board as a part of a deal to integrate ChatGPT into the maker's iPhone devices, but Apple has not done so, based on an individual conversant in the matter. Apple declined to comment.
Instead, OpenAI will host regular meetings with partners equivalent to Microsoft and Apple, in addition to investors Thrive Capital and Khosla Ventures – a part of a “recent approach to informing and fascinating key strategic partners” under Sarah Friar, the previous head of Nextdoor who was hired last month as the corporate's first chief financial officer, based on an OpenAI spokesperson.
The move also comes as antitrust regulators within the EU and US are reviewing the partnership between Microsoft and OpenAI amid broader concerns about competition within the fast-growing sector.
Microsoft accepted a non-voting position on the board after OpenAI was thrown into chaos last yr when its CEO Sam Altman was abruptly fired by the board, only to be reinstated just days later. The attempted board coup threatened OpenAI's valuation and, with it, Microsoft's multi-billion dollar investment in the corporate.
“This position provided insight into the activities of the board without compromising its independence,” Microsoft's deputy general counsel Keith Dolliver wrote in a letter to OpenAI late Tuesday. Since then, “we now have seen significant progress from the newly formed board and are confident within the direction of the corporate.” Therefore, Microsoft's role on the board is not any longer “needed.”
OpenAI stays certainly one of Microsoft’s “most valued partners,” Dolliver added.
The partnership with Microsoft has been crucial to OpenAI's success. The startup has relied on billions of dollars price of computing power and cloud storage from Microsoft. Microsoft CEO Satya Nadella was a key player during OpenAI's board shakeup in November.
The investment in OpenAI has also given Microsoft an early head start within the generative AI race. The company said in April that it was struggling to maintain up with demand for its AI services, which have driven accelerating revenue growth on its Azure cloud computing platform over the past three quarters.
Microsoft doesn’t have a conventional stake within the startup, but is entitled to a share of the profits of an OpenAI subsidiary as much as a certain limit.
According to OpenAI's website, it stays “a very independent company managed by the nonprofit organization OpenAI.”
Microsoft and OpenAI have downplayed their ties as antitrust concerns have mounted. The European Commission said in June it was exploring the potential for an antitrust investigation into the merger, after announcing it might not investigate under merger control rules. The Federal Trade Commission within the US has also begun reviewing investments by major tech corporations equivalent to Microsoft, Amazon and Google in generative AI startups.
A source conversant in the matter on the FTC said the move was “unlikely to handle the agency's concerns.”
An OpenAI spokesperson said: “We are grateful to Microsoft for expressing its confidence within the board and direction of the corporate, and we look ahead to continuing our successful partnership.”
In addition to Altman, the eight members of OpenAI's board include Lawrence Summers, the previous US Treasury Secretary, and Fidji Simo, CEO of the grocery delivery company Instacart. The board is chaired by Bret Taylor, former co-CEO of Salesforce and co-founder of the AI startup Sierra.
