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Microsoft Leaves OpenAI Board Amid Regulatory Scrutiny

Microsoft is giving up its observer seat on OpenAI’s board. This is due to better governance at the ChatGPT maker following last year’s board changes. It also relates to regulatory investigations into Microsoft’s connection with OpenAI. Here, Microsoft has poured billions into development. Both US and UK regulators are looking into this relationship. Plus, EU regulators recently declared they would take another look at the partnership using EU antitrust laws.

In a letter, Microsoft told OpenAI it was stepping down from the observer right away. “We are grateful for OpenAI leadership and board backing during this decision-making process,” said Microsoft. Confidence was expressed in the reformed board, which was set up after CEO Sam Altman was fired and then rehired last year. Microsoft acknowledged major advances by this new board and expressed faith in its path, especially its safety commitment and efforts to foster a positive culture.

Because of these factors, “we no longer believe we need to be observers,” said Microsoft. This implies there will be no more observer seats on OpenAI’s board in the future.

OpenAI thanked Microsoft for its trust in both their staff and company direction. In a public statement, they said, “We thank Microsoft for expressing faith in our Board and company path. We anticipate continuing our successful work together.” As per an OpenAI spokesperson, the startup based out of San Francisco plans to set up a fresh way of “keeping key strategic partners informed and involved.” These include firms like Apple and Microsoft, as well as other investors. This new method means holding regular meetings with stakeholders to update progress on moving towards OpenAI’s mission objective, as well as ensuring better safety collaboration.

The exit of Microsoft as an observer affects Apple, who will no longer be able to appoint someone for a similar position. Earlier this month, there were reports that Apple planned to place its app store head, Phil Schiller, on OpenAI’s board as a result of an agreement reached in June. But under this new method, OpenAI will not have observers on its board – effectively ending such an arrangement. Apple was asked to comment, but until now there has been no response.

Regulators are taking a closer look at AI startup investments. Other than the OpenAI and Microsoft connection, the FTC is also investigating links between Claude chatbot creator Anthropic and tech bigwigs Google and Amazon. The UK’s CMA is looking into Amazon and Anthropic, as well as partnerships by Microsoft with Mistral and Inflection AI. London-based law firm Fladgate partner Alex Haffner suggested the regulatory climate likely influenced Microsoft’s observer role withdrawal decision.

The European Commission is still looking into exclusive agreement clauses between companies while choosing not to formally review the investment by Microsoft in OpenAI. This signifies broader concerns about how much control large tech companies have over emerging AI technologies; there may be potential antitrust implications too.

Microsoft leaving OpenAI’s board suddenly follows a time of considerable changes within OpenAI – there were major restructuring moves here. CEO Sam Altman was let go without notice only to be later rehired – these led to forming a new board and those responsible for his initial firing were removed from the board. Recently, Microsoft stated that this unstable period has now given way to clear direction and some stability.

The pattern of AI investments and partnerships is ever-shifting, with regulators paying closer attention in order to ensure fair competition hand in hand with preventing monopolistic practices. Keeping tabs on how much involvement Microsoft has with OpenAI is part of a wider trend where regulators are growing increasingly wary about relationships between AI startups and major tech companies.

Finally, Microsoft deciding not to stay as observer on OpenAI’s board represents a significant governance change for the AI startup. It showcases the better internal governance at OpenAI, plus external pressures from regulatory authorities carefully watching the influence of big tech on new AI technologies. In the future, OpenAI will opt for a new method to keep strategic partners engaged. Their goal is improved transparency and cooperation while seeking to achieve its mission.

Jaleel Mwangi
Jaleel studied communications and has a friendly nature. He's dedicated and excels in editing videos, photos, and sounds. He's passionate about creating stories that connect with people. Jaleel is confident in his communication skills and has a pleasant character. He aims to produce content that everyone enjoys. When he's not busy, he likes to adventure and watch Sci-Fi movies.