Microsoft, Apple drop OpenAI board plans as scrutiny grows

Microsoft Corp. and Apple Inc. dropped plans to take board roles at OpenAI in a surprise decision that underscores growing regulatory scrutiny of Big Tech’s influence over artificial intelligence.

Microsoft, which invested $13 billion in the ChatGPT creator, will withdraw from the board, the company said in a letter to OpenAI, which was seen by Bloomberg News. Apple was due to take up a similar role, but an OpenAI spokesperson said the startup will have no board observers after Microsoft’s departure.

Regulators in Europe and the US had expressed concern about Microsoft’s sway over OpenAI, applying pressure on one of the world’s most valuable companies to show that it’s keeping the relationship at arm’s length. Microsoft has integrated OpenAI’s services into its Windows and Copilot AI platforms and, like other big US tech companies, is banking on the new technology to help drive growth. 

“Over the past eight months we have witnessed significant progress from the newly formed board and are confident in the company’s direction,” Microsoft wrote in the memo. “We no longer believe our limited role as an observer is necessary.”

Microsoft is facing broader scrutiny over its alleged dominance of artificial intelligence. The US has started separate investigations into Microsoft’s alleged dominance of the rapidly emerging field, and whether the company properly notified antitrust agencies about its deal with an OpenAI rival, Inflection AI, people familiar with the matter have said. 

European regulators also said they were going to survey Microsoft’s rivals about OpenAI’s exclusive use of its technology, and the UK’s competition regulator is weighing a deeper investigation of the tie up. 

Microsoft isn’t being singled out. The UK is also looking into Inc.’s $4 billion collaboration with AI company Anthropic, expressing concern that large tech companies are using partnerships to “shield themselves from competition.” The US is probing Nvidia Corp.’s dominance over AI chips. 

The Financial Times reported Microsoft’s exit earlier.

The biggest US tech companies including Microsoft as well as Nvidia, Alphabet Inc. and have poured tens of billions of dollars into AI businesses. While these investments and partnerships are a lifeline for the startups, regulators have expressed concern that they threaten to concentrate access to the most innovative large language models among the tech companies that already dominate other platforms. 

Tech giants are also striking non-financial agreements. These include Apple’s partnership with OpenAI to bring ChatGPT to the iPhone, and Microsoft’s decision earlier this year to bring on Inflection AI’s Mustafa Suleyman and most of his staff from the OpenAI rival.

Microsoft took on the non-voting observer role on OpenAI’s board last year, weeks after the startup’s directors had fired Chief Executive Officer Sam Altman in a dramatic coup over the direction of the company. Altman was quickly reinstated following a backlash from employees and the board was remade. 

“We’re grateful to Microsoft for voicing confidence in the board and the direction of the company, and we look forward to continuing our successful partnership,” OpenAI said in a statement to Bloomberg News, without commenting directly on Apple or Microsoft’s decisions. 

OpenAI said that moving forward, the company will host regular stakeholder meetings with partners and investors, including Thrive Capital and Khosla Ventures, “to share progress on our mission and ensure stronger collaboration across safety and security.”

OpenAI began in 2015 as a nonprofit research organization, but later shifted its structure to include a for-profit startup that has solicited investments and struck commercial partnerships. –BLOOMBERG