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Microsoft has given up its seat as an observer on OpenAI’s board, while Apple will not take a similar position, amid growing scrutiny from global regulators of Big Tech’s investments in AI startups.
Microsoft, which has invested $13 billion in generative AI chatbot maker ChatGPT, said in a letter to OpenAI that her departure from the board role would be “effective immediately.”
Apple was also expected to take an observer role on OpenAI’s board as part of a deal to integrate ChatGPT into the iPhone maker’s devices, but would not, according to a person with direct knowledge of the matter. Apple declined to comment.
OpenAI will instead host regular meetings with partners such as Microsoft and Apple and investors Thrive Capital and Khosla Ventures — part of a “new approach to inform and engage key strategic partners” led by Sarah Fryer, the former Nextdoor boss who was hired as its first chief financial officer last month, an OpenAI spokesperson said.
The move also comes at a time when antitrust authorities in the EU and US view the partnership between Microsoft and OpenAI as part of wider concerns about competition in the fast-growing sector.
Microsoft accepted a non-voting role on the board following the chaos that engulfed OpenAI last year, when its CEO Sam Altman was abruptly fired from the board before being reinstated just days later. The boardroom coup attempt threatened OpenAI’s valuation, and with it Microsoft’s multibillion-dollar investment in the company.
“This position provided insight into the board’s activities without compromising its independence,” Microsoft Deputy General Counsel Keith Dolliver wrote in a letter to OpenAI late Tuesday. Since then, “we’ve seen significant progress from the newly formed board and we’re confident in the direction of the company.” Therefore, Microsoft’s role on the board is no longer “necessary,” he said.
OpenAI remains one of Microsoft’s “most valuable partners,” Dolliver wrote.
Microsoft’s partnership is critical to OpenAI’s success. The startup relies on Microsoft for billions of dollars worth of computing power and cloud storage. Microsoft CEO Satya Nadella was a key mediator during the OpenAI boardroom turmoil in November.
Investing in OpenAI also gave Microsoft an early lead in the race for generative AI. The company said in April that it was struggling to keep up with demand for its AI services, which helped boost sales of its Azure cloud computing platform at an accelerated pace over the past three quarters.
Microsoft does not have a conventional equity stake in the startup. Instead, it is entitled to a share of profits from a subsidiary of OpenAI, up to a certain limit.
According to OpenAI’s website, it “remains a completely independent company operated by OpenAI Nonprofit.”
Microsoft and OpenAI play down their ties as antitrust concerns grow. The European Commission said in June it was exploring the possibility of an antitrust investigation into the tie-up, after saying it would not proceed with an investigation under merger control rules. The US Federal Trade Commission has also begun scrutinizing investments made by major tech companies, including Microsoft, Amazon and Google, in generative AI startups.
An OpenAI spokesperson said: “We are grateful to Microsoft for their confidence in the company’s board and direction, and we look forward to continuing our successful partnership.”
OpenAI’s eight-member board includes Altman, as well as Larry Summers, former US Treasury secretary, and Fiji Simo, CEO of grocery delivery company Instacart. It is chaired by Brett Taylor, former co-CEO of Salesforce and co-founder of AI startup Sierra.
Additional reporting by Michael Acton in San Francisco
