In Antitrust Dodge, Microsoft Surrenders Its OpenAI Board Seat

Microsoft has relinquished its observer seat on OpenAI's board of directors, a move that's widely seen as a stopgap measure against the multiple antitrust investigations it is facing.

"Effective immediately," Microsoft is no longer part of generative AI leader OpenAI's board, reported Financial Times on Wednesday.

Microsoft became part of the OpenAI board late last year, after it became entangled in the days-long corporate chaos surrounding the firing and rehiring of OpenAI CEO Sam Altman. According to reports at the time, the then-OpenAI board ousted Altman in a rejection of his full-bore approach to generative AI development.

Altman was soon rehired by OpenAI after days of backroom negotiations between the company and its various stakeholders, among them Microsoft, which has invested $13 billion in OpenAI since 2019. OpenAI's board was subsequently reconstituted, with Microsoft accepting a non-voting seat.

In a letter to OpenAI obtained by various publications on Wednesday, including FT, Microsoft said, "[W]e no longer believe our limited role as an observer is necessary." It elaborated:

[W]e accepted the non-voting board observer role at a time when OpenAI was in the process of rebuilding its board. This position provided insights into the board's activities without compromising its independence, and we appreciated the opportunity to serve as an observer during this period of change. Over the past eight months we have witnessed significant progress from the newly formed board and are confident in the company's direction.

The letter, attributed to Microsoft deputy general counsel Keith Dolliver, did not mention AI antitrust concerns as a motivation for Microsoft leaving the board. However, given that Microsoft's relationship with OpenAI is currently at the center of multiple anti-competition investigations, its exit on Wednesday is widely seen as an effort to alleviate those concerns.

An anonymous source within the U.S. Federal Trade Commision (FTC) told Reuters on Wednesday that "Microsoft sees significant potential antitrust exposure and is trying to get ahead of it." However, the source said, the move is unlikely to sway regulators.

The FTC is just one agency scrutinizing the current field of generative AI giants for potential antitrust violations. Earlier this year, the agency opened investigations into:

Microsoft's so-called "acqui-hire" of another AI startup, Inflection, is also under FTC investigation for potentially being structured in such a way as to avoid traditional reporting requirements.

Watchdogs across the pond also have their sights on Microsoft and OpenAI. Last month, the European Union's antitrust agency said it is investigating whether the two companies' close technical ties, particularly around Microsoft's Azure cloud platform, are stifling competition.

Microsoft is not the only big tech player feeling the heat from market regulators; FT reported that Apple has also decided to give up a seat at OpenAI's board. Apple and OpenAI recently inked a partnership allowing Apple to integrate its Siri personal assistant with OpenAI's ChatGPT technology. As part of that deal's terms, OpenAI was widely expected to offer Apple an observer seat at its board. That seems to have fallen through amid the climate of heightened antitrust scrutiny.

Instead of having Microsoft and Apple on its board, OpenAI will hold regular meetings with the two companies to provide business updates, reported FT, citing statements from an OpenAI spokesperson.

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.