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Microsoft drops OpenAI board observer seat amid regulator scrutiny

The OpenAI logo is displayed on a cell phone with an image on a computer monitor
The OpenAI logo is displayed on a cell phone with an image on a computer monitor Copyright Michael Dwyer/Copyright 2023 The AP. All rights reserved.
Copyright Michael Dwyer/Copyright 2023 The AP. All rights reserved.
By Simone McCandless and AP
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Microsoft, ChatGPT’s most prominent financial supporter, announced it is withdrawing its observer seat on the OpenAI board as the collaboration received scrutiny from antitrust regulators.


The global tech giant Microsoft announced on Tuesday that it has decided to withdraw from the OpenAI board in a letter to the startup. According to The Financial Times, the letter stated that its resignation was “effective immediately.”

It's understood that Microsoft believed that the observer role was causing increased concern among competition regulators.

The company said there had been substantial progress in OpenAI’s new board, which was reformed last year after the previous year’s reinstatement of the CEO, Sam Altman. It said OpenAI was headed on the right path as it was dedicated to building a “great culture.”

“Given all of this, we no longer believe our limited role as an observer is necessary,” stated Microsoft, which has taken a stake in the OpenAI board by investing €10.2 billion.

The U.S. Federal Trade Commission is investigating the partnership, while the Competition and Markets Authority in the U.K. is trying to determine whether it has led to “an acquisition of control.”

Although the European Commission did not decide to conduct a formal merger review into the company’s investment in OpenAI, it has still scrutinised the exclusivity clauses in the agreement.

Alex Haffner, a competition partner at U.K. law firm Fladgate, said it was not hard to conclude that Microsoft’s decision to ditch the board seat was heavily influenced by rising scrutiny of big technology companies and their links with A.I. startups. 

“It is clear that regulators are very much focused on the complex web of inter-relationships that Big Tech has created with A.I. providers, hence the need for Microsoft and others to carefully consider how they structure these arrangements going forward,” he said.

Open A.I. is following Microsoft’s resignation with a new approach to communication and engaging with key strategic partners with frequent meetings to ensure stakeholders of progress and more vital partnerships regarding security and safety.

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