Apple is unable to appoint executives to roles similar to these due to the startup’s new strategy
Amid regulatory scrutiny of big tech’s ties to AI companies, Apple is not allowed to appoint an executive to a similar role, and Microsoft has given up its observer seat on the OpenAI board.
Microsoft, the main investor in ChatGPT, informed the firm of its decision in a letter, which was first made public by the Financial Times. The retirement from the observer position, which entails no voting rights on board decisions, was announced by Microsoft as “effective immediately.”
Microsoft, which has spent $13 billion (£10.2 billion) in OpenAI, declared, “We no longer find our limited observer role necessary.”
It is known, nevertheless, that Microsoft felt competition authorities were becoming concerned about the observer function. The Competition and Markets Authority in the UK is evaluating if the agreement qualifies as “an acquisition of control,” and the Federal Trade Commission in the US is also investigating the relationship.
The European Commission is looking into exclusivity provisions in Microsoft’s deal but has decided not to start a formal merger review of the company’s investment in OpenAI.
A representative for OpenAI claims that the San Francisco-based company is implementing a new approach to “inform and engage key strategic partners,” such as Apple and Microsoft, in addition to other financial investors.
We intend to arrange frequent stakeholder meetings in the future to provide updates on the status of our mission and to promote closer cooperation on matters of safety and security. We look forward to continued input and direction from these crucial parties,” the spokesman said.
With the new strategy, board observers will no longer be a part of OpenAI, hence prohibiting Apple from playing such a role. According to earlier reports this month, Apple planned to include app store chief Phil Schiller on the board as part of a June deal. We’ve reached out to Apple to get their reaction.
Regulators are closely examining funds given to AI businesses. The FTC is looking at partnerships between Microsoft and OpenAI as well as between Anthropic, the company that created the Claude chatbot, and Google and Amazon. The CMA in the UK is also looking at Microsoft’s alliances with Mistral and Inflection AI, as well as Amazon’s connections with Anthropic.
As a partner at the UK law firm Fladgate, Alex Haffner says it’s hard to ignore how the regulatory landscape affected Microsoft’s choice.
Regulators are clearly keeping a careful eye on the complex web of ties that large tech corporations have built with AI providers. This emphasises how crucial it is that Microsoft and other businesses carefully reevaluate how they set up these kinds of agreements going forward,” he said.
