Microsoft and Apple have opted out of taking board seats at OpenAI amid escalating regulatory scrutiny of big tech’s role in AI development and deployment. According to a Bloomberg report on July 10, citing an anonymous source, Microsoft has formally withdrawn from the OpenAI board, approximately a year after making a substantial $13 billion investment in April 2023.
In a memo addressed to OpenAI, Microsoft noted, “Over the past eight months, we have observed significant progress from the newly formed board and are confident in the company’s direction.” The tech giant added that it no longer sees its limited role as an observer as necessary.
Contrary to earlier expectations that Apple would secure an observer role following a landmark agreement announced in June, OpenAI will now operate without board observers following Microsoft’s decision.
OpenAI expressed gratitude to Microsoft for its confidence in the board and direction of the company, affirming a commitment to their partnership.
This shift in board involvement by major tech firms occurs amid increasing regulatory pressures. Concerns over the potential influence of big tech on AI development and market dominance have prompted heightened scrutiny from regulatory bodies globally. In June, EU regulators announced a possible antitrust investigation into OpenAI’s partnership with Microsoft, with plans to gather input from third parties and survey firms like Microsoft, Google, Meta, and TikTok’s ByteDance regarding their AI collaborations.
Source: Open Link
“Microsoft and Apple’s decision to step back from board positions at OpenAI appears to be a strategic maneuver aimed at preempting potential regulatory challenges. By adopting a more distant relationship with the AI firm, these tech giants could be seeking to mitigate concerns about exerting 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 Open AI.
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 Open AI, an investigation originally announced when Open AI 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 focussed 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 pivotal role in technological advancement and societal change, finding the balance between innovation, competition, and regulation remains a complex challenge for industry players and policymakers alike.
In the coming months, we can expect ongoing scrutiny of AI partnerships and investments, as regulators worldwide work to ensure fair competition and responsible AI development.
