As regulators across the U.S. and Europe continue to crack down on corporate partnerships in the buzzing A.I. world, both Microsoft (MSFT) and Apple (AAPL) are abandoning their board seats at OpenAI. Microsoft executive Dee Templeton has been a non-voting board member of OpenAI since the beginning of the year, while Apple executive Phil Schiller was reportedly set to join as a non-voting observer later in 2024.
Microsoft yesterday (July 9) told OpenAI that the withdrawal will take place “effective immediately,” as first reported by the Financial Times, which also noted that Apple has decided to decline its board offer. In order to continue to keep its partners informed on the organization’s inner workings, OpenAI will instead begin hosting regular meetings with the two companies.
Microsoft is OpenAI’s largest investor, having funneled some $13 billion into the company. Their partnership, which began five years ago, integrates OpenAI’s A.I. technology into Microsoft products and sees Microsoft provide computing power for OpenAI. Despite Microsoft’s major investment, OpenAI maintains that it “remains an entirely independent company.” It currently operates as a nonprofit that runs a capped-profit subsidiary from which Microsoft is entitled to receive a percentage of profit—although OpenAI CEO Sam Altman is reportedly looking to restructure the entire organization into a fully for-profit model.
In November, Microsoft was shocked when Altman was briefly ousted by OpenAI’s board. Shortly after Altman was reinstated as CEO and a new board was formed, it received a non-voting observer board role to remain better informed on the company’s decision-making. But in yesterday’s letter to OpenAI, written by Microsoft’s deputy general counsel Keith Dolliver, the company said that although the position “provided insights into the board’s activities without compromising its independence,” the role was no longer “necessary” and reiterated its confidence in OpenAI’s direction, according to the Financial Times.
Why the change of heart?
The withdrawal comes amid heightened scrutiny around Microsoft’s partnership with OpenAI, which has boosted the Big Tech company’s profits and market cap. The European Commission, which previously dropped a review into whether the entanglement broke European Union merger rules, is currently weighing whether the two companies warrant an antitrust examination; while the U.K.’s Competition and Markets Authority is reviewing whether the partnership has resulted in “an acquisition of control.” The Federal Trade Commission in the U.S., too, is currently examining whether OpenAI and Microsoft have violated antitrust laws.
While Apple might not yet be facing the same levels of scrutiny when it comes to A.I. regulation, it recently formalized its ties with OpenAI with a partnership that will see the latest version of ChatGPT integrated across Apple devices. While it was revealed earlier this month that Apple’s Schiller would join OpenAI’s board to further strengthen the relationship between the two companies, Apple has since decided to back out.
With both Microsoft and Apple no longer privy to board meetings, OpenAI going forward will pursue a different method to keep its key partners informed. Microsoft and Apple, in addition to OpenAI investors like Thrive Capital and Khosla Ventures, will now participate in meetings with the company. “Moving forward, we will host regular stakeholder meetings to share progress on our mission and ensure stronger collaboration across safety and security,” said an OpenAI spokesperson in a statement to the Guardian. “We look forward to continuing to receive feedback and advice from these key stakeholders.”
