Microsoft quits OpenAI board seat as antitrust scrutiny of AI partnerships intensifies

Microsoft has given up its seat on OpenAI’s board of directors, saying participation is no longer necessary as the maker of ChatGPT has improved its governance since the crisis hit Chaos in the boardroom last year.

In a letter dated Tuesday, Microsoft confirmed that it is stepping down as an observer on the artificial intelligence company’s board of directors “effective immediately.”

“We appreciate the support we received from OpenAI leadership and the OpenAI Board as we made this decision,” the letter said.

The surprise departure comes amid mounting scrutiny from antitrust regulators over the powerful AI partnership. Microsoft has reportedly invested $13 billion in OpenAI.

European Union regulators said last month that they take a fresh look in the partnership under the 27-nation bloc’s antitrust rules, with British competition authorities also investigating the deal.

Microsoft took the seat on the board after a power struggle that saw OpenAI CEO Sam Altman fired and then quickly reinstated, while the board members responsible for the firings were ousted.

“Over the past eight months, we have seen significant progress from the newly formed board of directors and are confident in the direction the company is headed,” Microsoft said in its letter. “Given all of this, we no longer believe our limited role as an observer is necessary.”

With Microsoft’s departure, OpenAI no longer has an observer position on the board of directors.

“We are grateful to Microsoft for the confidence it has shown in the Board and the direction of the company, and we look forward to continuing our successful collaboration,” OpenAI said in a statement.

It’s not a stretch to conclude that Microsoft’s decision to step down from the board was heavily influenced by the increasing scrutiny of big tech companies and their ties to AI startups, said Alex Haffner, a partner at British law firm Fladgate.

“It is clear that regulators are laser-focused on the complex web of interrelationships that Big Tech has created with AI providers, and it is imperative that Microsoft and others carefully consider how they structure these arrangements going forward,” he said.

OpenAI said it would take a new approach to inform and engage “key strategic partners” such as Microsoft and Apple, and investors such as Thrive Capital and Khosla Ventures, with regular meetings to keep stakeholders updated on progress and ensure stronger collaboration on safety and security.