Microsoft has decided to withdraw its plans to take a non-voting seat on the board of OpenAI, a move that comes amidst increased scrutiny from regulators regarding deals involving AI companies.
The tech giant’s $13-billion partnership with OpenAI has sparked concerns on both sides of the Atlantic about the extent of Microsoft’s influence over its smaller partner, particularly following a failed attempt to oust OpenAI CEO Sam Altman last year, which Microsoft supported.
Despite being a market leader in AI due to its early investment in OpenAI, Microsoft has now relinquished its observer role on the board. The decision was communicated through a letter sent from Microsoft to OpenAI on Tuesday, with the withdrawal effective immediately.
Regulators, including the EU, have been closely monitoring Microsoft’s relationship with OpenAI, with a preliminary examination concluding that Microsoft’s investment did not equate to control over OpenAI. However, the EU is seeking further details from Microsoft regarding exclusivity clauses that could impact competition.
Apple, which was also set to join OpenAI’s board, reportedly decided against it, although the company has not provided a comment on the matter. The EU Competition Chief Margrethe Vestager has been vigilant about big tech investments in the AI market and is keeping a close watch on the sector.
As scrutiny intensifies on relationships between big tech companies and AI providers, it is crucial for companies like Microsoft to carefully structure their arrangements to comply with competition regulations. The EU is particularly focused on acqui-hires, where companies acquire others for talent, to determine if it distorts competition.
Microsoft hired key figures from OpenAI’s rival, Inflection, earlier this year, to spearhead a new consumer AI unit, highlighting a different approach to traditional mergers. This move by Microsoft could potentially avoid a merger probe as Inflection continues to operate independently.
Regulators, armed with the authority to block mergers if competition concerns arise, are closely monitoring the complex interactions between big tech companies and AI providers. As the AI market evolves, companies like Microsoft will need to navigate these regulatory landscapes to ensure compliance and fair competition.
