Excerpt from Business Standard Article, Published on July 10, 2024

Microsoft has given up its board observer seat at OpenAI due to regulatory scrutiny on both sides of the Atlantic. The tech giant cited significant improvements in OpenAI’s governance over the past eight months as the reason for this move.

The board observer position, held by Microsoft since November last year, allowed the company to attend OpenAI’s board meetings and access confidential information without voting rights. This seat, along with Microsoft’s over $10 billion investment in OpenAI, has raised concerns among antitrust watchdogs in Europe, Britain, and the U.S. about the extent of Microsoft’s control over OpenAI.

Apple was also expected to take an observer role on OpenAI’s board but decided against it, according to a report by the Financial Times. Apple’s decision was influenced by the same regulatory scrutiny.

Microsoft’s decision to give up the observer seat comes as OpenAI has formed new partnerships, driven innovation, and grown its customer base under CEO Sam Altman’s leadership. In a letter to OpenAI dated July 9, Microsoft stated its confidence in the direction of the company’s newly formed board, deeming its limited role as an observer no longer necessary.

EU antitrust regulators recently stated that the partnership between Microsoft and OpenAI would not be subject to the bloc’s merger rules due to Microsoft’s lack of control over OpenAI. However, they will seek third-party views on the exclusivity clauses in the agreement. In contrast, British and U.S. antitrust watchdogs continue to express concerns about Microsoft’s influence over OpenAI and its independence.

As competition in AI technology sales intensifies, Microsoft is expanding its AI offerings on the Azure platform and diversifying its consumer AI division by hiring Inflection’s CEO, demonstrating its efforts to address antitrust concerns and showcase independence from OpenAI.

To delve deeper into this topic, please read the full article on Business Standard.