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Microsoft Exits OpenAI Board Amid Regulatory Pressure

The move comes just days after reports suggested Apple might take an observer role on the board, but now the Cupertino giant has also opted out

by Mihir Bagwe July 10, 2024

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In a move likely fueled by intensifying antitrust scrutiny, Microsoft is exiting OpenAI and stepping down from its non-voting observer seat of the AI company’s board of directors. This comes just days after reports suggested Apple might take a similar observer role, but now the Cupertino giant has also opted out.

Microsoft’s exit, communicated via a letter on Tuesday, cited “significant progress” made by OpenAI’s newly formed board, according to Axios. This explanation rings somewhat hollow, considering Microsoft’s role was established just last November following a period of upheaval at OpenAI that saw the ousting and reinstatement of CEO Sam Altman.

OpenAI announced a new safety and security committee in May end as it began training a new AI model intended to replace the GPT-4 chatbot. A month later, OpenAI pushed out the rollout of its highly anticipated “Voice Mode” feature for ChatGPT to July, citing safety concerns. The company said it needed more time to ensure the model could “detect and refuse certain content.”

Microsoft Exits OpenAI, Caving to Regulatory Pressure?

The timing of these decisions coincides neatly with growing regulatory pressure on Big Tech’s influence in the burgeoning field of artificial intelligence. Both the U.S. Federal Trade Commission (FTC) and the European Commission (EC) have expressed concerns that tech giants’ investments in AI startups like OpenAI could stifle competition and create monopolies in key technological areas.

In June, the FTC launched an investigation into Big Tech investments in generative AI startups, including Microsoft, Amazon, and Google. The EC, meanwhile, explored the possibility of an antitrust probe into the Microsoft-OpenAI partnership after deciding against a merger control investigation.

AI Model Access Scrutinized

While both Microsoft and OpenAI maintain the company’s independence despite the multi-billion dollar investment, the optics surrounding the close relationship are not lost on regulators. Microsoft’s access to cutting-edge AI models through this partnership gives them a significant advantage, potentially hindering the growth of smaller competitors.

OpenAI seems to be taking a new approach to partner engagement. Moving forward, they plan to host regular meetings with key partners like Microsoft and Apple, alongside investors, to foster communication and collaboration. This strategy aims to maintain strong relationships without raising red flags for regulators.

The future trajectory of Big Tech’s involvement in AI development remains to be seen. The recent retreat from board positions suggests a potential shift as companies navigate the increasingly complex regulatory landscape as they strive to maintain a competitive edge in the race for AI dominance.

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