Microsoft’s Decision Regarding OpenAI

Microsoft has decided to give up its seat on OpenAI’s board, forfeiting a nonvoting position acquired last year. This move comes amidst increased scrutiny from regulators regarding the relationship between the tech giant and OpenAI, the company behind the renowned chatbot ChatGPT.

In a letter delivered on Tuesday, Microsoft informed OpenAI of its decision. Despite stepping down from the board, Microsoft remains the largest investor in OpenAI, holding a 49 percent stake. The tech giant has pledged a substantial $13 billion investment in OpenAI, the company responsible for developing ChatGPT, a highly popular chatbot known for its diverse capabilities such as answering questions, generating images, and even writing software code.

OpenAI has also revealed plans to commence quarterly meetings with key investors and business partners. These meetings, which will be inclusive of investors like Microsoft, as well as venture firms such as Khosla Ventures and Thrive Capital, and Apple, aim to foster collaboration and exchange of ideas. Notably, Apple recently secured a deal to integrate ChatGPT into iPhones later this year.

Microsoft had joined OpenAI’s board as a nonvoting observer in late 2021, following a series of leadership changes within OpenAI. However, in their letter to OpenAI, Keith Dolliver, Microsoft’s corporate secretary, expressed confidence in the company’s new direction and indicated that Microsoft’s presence on the board was no longer necessary.

The decision by Microsoft coincides with regulatory scrutiny in both Europe and the United States concerning its partnership with OpenAI. European antitrust authorities have raised concerns about the potential impact of dominant companies like Microsoft on smaller competitors in the A.I. space. Similarly, the Federal Trade Commission in the U.S. is initiating an investigation into the Microsoft-OpenAI partnership to ensure compliance with regulatory standards.

Microsoft has historically sought to address regulatory concerns through compromise rather than confrontation. For instance, the company successfully navigated regulatory hurdles to finalize the $69 billion acquisition of Activision Blizzard by making concessions such as offering games on rival platforms and licensing games to a competitor.

Contributing reporting by Karen Weise.