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Microsoft and Apple will not join OpenAI’s board as regulatory scrutiny increases
Microsoft and Apple will not join OpenAI’s board as regulatory scrutiny increases

Microsoft and Apple, the two main partners of ChatGPT maker OpenAI, will not have an advisory role on the company’s board as governments in the United States and Europe take a closer look at the power of Big Tech companies over leading AI startups.

Microsoft, which has invested billions in OpenAI, was given a non-voting seat on the company’s board after a dramatic board shakeup last year led to the firing of CEO Sam Altman and then the rehiring of him days later. Apple was also expected to take a role on the advisory board after it reached a deal last month to integrate ChatGPT into its products, Bloomberg News previously reported. But such a plan will not be implemented. OpenAI confirmed that its board will no longer have any advisory positions in the future.

A Microsoft spokesman confirmed that the company will give up its seat on the board. An Apple spokesman did not respond to a request for comment. The Financial Times first reported on the two companies’ withdrawals.

Because there are no formal board positions for key partners, OpenAI will hold regular meetings with key investors and partners. These will be open to Apple and Microsoft, OpenAI spokeswoman Kayla Wood said in an email. “We look forward to continuing to receive feedback and advice from these key stakeholders.”

The rise of OpenAI and other AI startups like Anthropic, fueled by interest in ChatGPT and other chatbots, has shaken up the tech industry over the past year, with analysts and technology leaders suggesting the upstarts could usurp some of the power of dominant players like Microsoft.

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But OpenAI and other leading AI startups have become dependent on investments from the largest technology companies due to the immense costs of developing cutting-edge AI. Algorithms behind systems like ChatGPT are trained using expensive and power-hungry computer hardware.

Microsoft invested billions in OpenAI in early 2023, while Anthropic also received funding from Google and Amazon last year. But those deals have drawn the attention of regulators. (Amazon founder Jeff Bezos owns the Washington Post.)

In January, the Federal Trade Commission announced it would investigate whether investments and partnerships between AI companies and Big Tech hinder genuine competition. “Our study will shed light on whether investments and partnerships by dominant companies risk distorting innovation and undermining fair competition,” FTC Chair Lina Khan said in a statement at the time.

Last month, Khan’s agency entered into an agreement with the Justice Department that lays the groundwork for an FTC investigation into the Microsoft-OpenAI partnership.

Microsoft giving up its formal role on OpenAI’s board is unlikely to address the FTC’s concerns about the relationship between the two companies, according to an agency official who spoke on the condition of anonymity to discuss the confidential matter. The official said the move shows the companies recognize their deal could raise “serious” antitrust issues.

OpenAI has been hiring lawyers and lobbyists at a rapid pace as it has grown and faced increasing legal and regulatory pressure. The company is facing a growing number of lawsuits from news organizations, authors and other content creators who claim the company has used their copyrighted works without payment or permission to train its AI algorithms.

Despite its notoriety, OpenAI’s business is still in its infancy and needs to find many more customers to make a profit. Alliances with Big Tech can help AI startups gain access to billions of paying customers around the world, which is easier than building new products from scratch.

OpenAI and Apple described their recent deal as mutually beneficial: Apple improved the iPhone by providing access to ChatGPT and OpenAI introduced its technology to users of Apple phones and computers.

Microsoft’s advisory role on OpenAI’s board was announced after the AI ​​company’s dramatic board showdown in November. The majority of the company’s previous board voted to fire Altman, a move that sparked outrage and shock in the tech world and led to the majority of the company’s employees threatening to leave. Altman was reinstated a few days later in a deal that saw nearly all board members resign.

By Everly