Avoiding Antitrust?Microsoft: Abandon OpenAI Board Watch Seat Now!
In June this year, the European Commission once again stated that it was exploring the possibility of an antitrust investigation into the cooperation between Microsoft and OpenAI.
On July 10th, Microsoft announced a significant move to relinquish its observer seat on the OpenAI board, citing "substantial progress" made by OpenAI in the past eight months and expressing confidence in the company's direction, thus deeming the seat unnecessary.
In a letter to OpenAI, Microsoft stated that its decision to exit the board would take "immediate effect."
It's worth noting that since Sam Altman was ousted in November last year, Microsoft has been actively vying for the seat. Later, Microsoft played a crucial behind-the-scenes role in Altman's return to OpenAI and facilitated changes in the company's governance.
As the silent financial backer of OpenAI, Microsoft has invested at least $13 billion into OpenAI. Despite such a massive investment, Microsoft does not nominally hold any equity in OpenAI. Microsoft's returns from OpenAI come entirely from its subsidiaries, with a cap on the amount of return.
The role of OpenAI for Microsoft is not limited to revenue generation; thanks to Chat GPT, Microsoft continues to lead in the generative AI race, fiercely competing with Google. In April of this year, Microsoft stated that it is striving to adapt to the rapidly growing market demand for AI services, with AI services contributing significantly to the accelerated sales growth of its Azure cloud computing platform in the past three quarters.
Regarding Microsoft's decision, OpenAI expressed, "We appreciate Microsoft's trust in the board and the company's direction, and we look forward to maintaining a successful partnership." OpenAI also added that it is "seeking a new strategy to keep key strategic partners (such as Microsoft and Apple) and investors (such as Thrive Capital and Khosla Ventures) informed and involved."
However, sources familiar with OpenAI's thinking revealed that with Microsoft's exit, OpenAI will no longer have any observer seats on its board.
Microsoft's voluntary exit from the OpenAI observer seat may be related to avoiding antitrust issues.
Last month, European regulators indicated that they would investigate Microsoft's competitors regarding OpenAI's exclusive use of its technology. This highlights the increasing pressure on Microsoft, which hopes to leverage OpenAI's services to promote its Windows and Copilot AI platforms. It is reported that the U.S. will conduct a separate antitrust investigation into Microsoft's monopoly position in this rapidly rising field.
Sources informed about the matter stated that the Federal Trade Commission (FTC) is also investigating whether Microsoft properly notified antitrust authorities about its deal with Inflection AI. In March of this year, the software giant headquartered in Redmond, Washington, agreed to pay $650 million to the startup for the licensing of its AI software and hired most of Inflection's employees.
In June of this year, the European Commission reiterated that it is exploring the possibility of an antitrust investigation into the cooperation between Microsoft and OpenAI, after previously stating, "There will be no investigation under merger control rules." Meanwhile, the Federal Trade Commission has also begun reviewing investments by large tech companies such as Microsoft, Amazon, and Google in AI startups.
It is notable that after Microsoft announced its exit from the observer seat, the media reported that another tech giant—Apple—will also not take on an observer role on the OpenAI board. Last month, OpenAI and Apple just established a cooperative relationship, with Apple set to introduce generative AI Chat GPT in iOS 18, paving the way for the iPhone to join the AI smartphone battlefield.
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