Microsoft, Apple Drop OpenAI’s Board Seats Amid Antitrust Probe

Two big names in the tech industry, Apple and Microsoft, have taken a step back from their respective involvements with OpenAI’s board of directors.

The Financial Times reported that Microsoft has given up its seat as an observer on the board at OpenAI. Meanwhile Apple will reportedly not take up a similar position on the board.

Microsoft has occupied an observer position on OpenAI’s board ever since Microsoft made clear its displeasure with the previous not-for-profit board, which in November 2023 had unexpectedly fired CEO Sam Altman.

Observer positions

Days later, and under intense pressure from Microsoft, OpenAI had rehired Sam Altman after Microsoft CEO Satya Nadella had called for a “change” in the governance of OpenAI.

When Sam Altman was reinstated as CEO, a new board of directors was also appointed, with Microsoft taking an observer seat due to the fact that Redmond, is by far, OpenAI’s biggest investor (up to $13 billion).

OpenAI also heavily depends on Microsoft’s Azure cloud infrastructure for its costly computing infrastructure.

Meanwhile it emerged last week that Apple fellow Phil Schiller, the iPhone maker’s former marketing chief, was to given an observer role on OpenAI’s board.

Schiller’s appointment was due to Apple announcing at its annual WWDC developer conference, that it would bring OpenAI’s ChatGPT chatbot to its devices including iPads, iPhones, Vision Pro headsets and Macs later this year.

Board withdrawal

But now the Financial Times has reported that Microsoft has given up its seat as an observer on the board of OpenAI while Apple will not take up a similar position.

Microsoft reportedly said in a letter to OpenAI that its withdrawal from its board role would be “effective immediately”.

Apple had also been expected to take an observer role on OpenAI’s board as part of a deal to integrate ChatGPT into the iPhone maker’s devices, the FT reported, but would not do so, according to a person with direct knowledge of the matter.

Apple declined to comment on the matter, the FT reported.

Instead OpenAI will host regular meetings with partners such as Microsoft and Apple and investors Thrive Capital and Khosla Ventures – part of “a new approach to informing and engaging key strategic partners” under Sarah Friar, the former Nextdoor boss who was hired as its first chief financial officer last month, an OpenAI spokesperson was quoted as saying.

Regulatory pressure

The Microsoft retreat from governance oversight of OpenAI’s board of directors comes as antitrust authorities in both the EU and US examine the partnership between Microsoft and OpenAI as part of broader concerns about competition in the rapidly growing AI sector.

“This position provided insights into the board’s activities without compromising its independence,” Microsoft’s deputy general counsel Keith Dolliver was quoted by AP as writing in a letter to OpenAI late on Tuesday.

Since then “we have witnessed significant progress from the newly formed board and are confident in the company’s direction.” Therefore, Microsoft’s role on the board was no longer “necessary”, he reportedly added.

OpenAI remains one of Microsoft’s “most valued partners”, Dolliver wrote.

Microsoft does not have a conventional equity stake in OpenAI. Instead, it has an entitlement to a share of the profits from a subsidiary of OpenAI, up to a certain limit.

An OpenAI spokesperson reportedly said: “We’re grateful to Microsoft for voicing confidence in the board and the direction of the company, and we look forward to continuing our successful partnership.”

OpenAI’s eight-person board of directors includes Altman as well as Larry Summers, the former US Treasury secretary, and Fidji Simo, chief executive of grocery delivery company Instacart.

It is chaired by Bret Taylor, former co-CEO of Salesforce.