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After investing $13 billion in OpenAI in 2023, Microsoft is distancing itself from the AI startup amid growing scrutiny from regulators.
Technology giants Microsoft and Apple have reportedly decided not to take up board seats at the artificial intelligence firm OpenAI amid increasing regulatory scrutiny. According to a Bloomberg report on July 10, Microsoft has sent a letter to OpenAI announcing its withdrawal from the board. This decision comes about a year after Microsoft made its substantial $13 billion investment in OpenAI in April 2023.
Microsoft’s withdrawal means that OpenAI will no longer have board observers. In its memo to OpenAI, Microsoft stated, “Over the past eight months, we have witnessed significant progress from the newly formed board and are confident in the company’s direction. “We no longer believe our limited role as an observer is necessary.”
Contrary to recent reports suggesting Apple would also gain an observer role on OpenAI’s board as part of a landmark agreement announced in June, OpenAI has clarified that it will have no board observers following Microsoft’s departure. OpenAI expressed gratitude to Microsoft for its confidence in the board and the company’s direction, stating, “We’re grateful to Microsoft for voicing confidence in the board and the direction of the company, and we look forward to continuing our successful partnership.”
Both Microsoft and OpenAI did not respond to requests for comments regarding the board membership at the time of publication.
This development occurs amid increasing regulatory pressure on Big Tech firms concerning their potential impact on AI and industry dominance. In June, European Union regulators announced that OpenAI could face an EU antitrust investigation over its partnership with Microsoft. EU competition chief Margrethe Vestager mentioned that local regulators would seek additional third-party views and survey firms like Microsoft, Google, Meta, and ByteDance’s TikTok regarding their AI partnerships.
Previously, the European Commission indicated that Microsoft could be fined up to 1% of its annual revenue in the EU if it does not respond to a request for information related to its Bing search engine and its associated generative AI services.
In April 2024, reports suggested that Apple and OpenAI were actively discussing the integration of generative AI technologies on iOS. Despite the current regulatory climate, these discussions highlight the ongoing interest and potential collaboration between major tech companies and AI developers.
The decisions by Microsoft and Apple to renounce board membership at OpenAI underscore the complexities and regulatory challenges faced by tech giants in the AI sector. As scrutiny intensifies, these companies are navigating their roles and partnerships carefully to comply with regulatory standards while continuing to innovate and collaborate in the rapidly evolving AI landscape.
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