Microsoft Gives Up Observer Seat on OpenAI Board After Review by Regulators

Microsoft has given up its observer seat on OpenAI’s board, a move that has been viewed critically by regulators on both sides of the Atlantic. Microsoft said it was no longer necessary after the AI ​​startup’s governance improved significantly over the past eight months.

The US tech giant took a non-voting observer position on OpenAI's board in November last year after OpenAI CEO Sam Altman took over the company, which runs the viral generative AI program ChatGPT.

The seat meant the company could attend OpenAI board meetings and access confidential information, but it did not have voting rights on matters such as electing board members.

The surveillance and Microsoft's investment of more than $10 billion in OpenAI has raised concerns among antitrust watchdogs in Europe, the UK and the US about the extent of control Microsoft exercises over OpenAI.

Microsoft justified the stepping down from the supervisory seat with OpenAI's new partnerships, innovation, and growing customer base since Altman returned to the startup.

“Over the past eight months, we have seen significant progress from our newly formed board and are confident in the direction of the company. Given all of this, we no longer believe our limited role as an overseer is necessary,” she said in a letter to OpenAI as of July 9.

EU antitrust regulators said last month that the partnership was not subject to EU merger rules because Microsoft does not control OpenAI.

In contrast, antitrust watchdogs in the UK and US still have concerns and questions about Microsoft's influence over OpenAI and its independence.

Microsoft and OpenAI are increasingly competing to sell AI technologies to enterprise customers to generate revenue and demonstrate their independence from regulators to address antitrust concerns.

Additionally, Microsoft is expanding its AI offerings on the Azure platform and has appointed the CEO of Inflection to lead its consumer AI division. The move is widely seen as an attempt to diversify beyond OpenAI. (Reporting by Fu Yun Qi; Additional reporting by Crystal Hu and Jeffrey Dustin in San Francisco; Editing by Jamie Freed)