OpenAI board shake-up: Microsoft out, Apple backs away amid AI partnership scrutiny

Microsoft has withdrawn from its non-voting observer role on OpenAI's board, while Apple has opted not to take a similar position, reports Axios and Financial Times. The ChatGPT maker plans to update its business partners and investors through regular meetings instead of board representation. The development comes as regulators in the EU and US increase their scrutiny of Big Tech's investments in AI startups due to concerns about stifling competition.

Axios reports that on Tuesday, Microsoft's deputy general counsel, Keith Dolliver, sent a letter to OpenAI stating that the tech giant's board role was "no longer necessary" given the "significant progress" made by the newly formed board. Microsoft accepted a non-voting position on OpenAI's board in November following the ouster and reinstatement of OpenAI CEO Sam Altman.

Last week, Bloomberg reported that Apple's Phil Schiller, who leads the App Store and Apple Events, might join OpenAI's board in an observer role as part of an AI deal. However, the Financial Times now reports that Apple will not take up such a position, citing a person with direct knowledge of the matter. Apple did not immediately respond to our request for comment.

Instead of board observer roles, OpenAI plans to host regular meetings with partners such as Microsoft and Apple, as well as investors Thrive Capital and Khosla Ventures, according to an OpenAI spokesperson who spoke with Financial Times. The decision is part of "a new approach to informing and engaging key strategic partners" under Sarah Friar, who came on as OpenAI's first chief financial officer last month.

OpenAI's current eight-person voting board of directors consists of Altman, former US Treasury Secretary Larry Summers, former CEO of the Bill & Melinda Gates Foundation Sue Desmond-Hellmann, former NSA director Paul M. Nakasone, former Sony America President Nicole Seligman, Quora CEO Adam D’Angelo, and Instacart CEO Fidji Simo, with former Salesforce co-CEO Bret Taylor serving as chair.

Regulatory pressure intensifies

Microsoft remains a critical financial and technology resource for OpenAI, having invested over $10 billion in the company since early 2023. The partnership has given Microsoft early access to leading generative AI models (although the value of that in the long term remains to be seen) while providing OpenAI with Microsoft computing muscle that powers both new AI model training runs and services like ChatGPT.

While no official source has yet officially linked Microsoft's board withdrawal (and Apple's change of direction on a potential OpenAI board position) to regulatory scrutiny, it's unlikely to be a coincidence. Regulators in the US and Europe are worried that Big Tech's heavy influence in fast-growing AI startups may unreasonably edge out competition and establish de facto monopolies over key technologies that would stifle smaller competitors.

In June, the FTC began looking into investments made by Big Tech companies (such as Microsoft, Amazon, and Google) in generative AI startups. Meanwhile, the European Commission also announced it was exploring the possibility of an antitrust investigation into the Microsoft/OpenAI partnership after deciding not to proceed with a probe under merger control rules.

Even though Microsoft's financial ties run deep into OpenAI, as Financial Times notes, the ChatGPT maker states: "While our partnership with Microsoft includes a multibillion dollar investment, OpenAI remains an entirely independent company governed by the OpenAI Nonprofit."