Microsoft Quits OpenAI Board As Regulators Crack Down On Big Tech’s AI Dealmaking

Topline

Microsoft has relinquished its seat on OpenAI’s board and Apple will no longer assume an equivalent role, according to news reports Wednesday, an unexpected move from the tech giants as they jostle for AI supremacy amid increasing scrutiny from regulators over their investments in artificial intelligence.

Key Facts

Crucial Quote

“It is hard not to conclude that Microsoft’s decision has been heavily influenced by the ongoing competition/antitrust scrutiny of its (and other major tech players) influence over emerging AI players such as Open AI,” Alex Haffner, competition partner at U.K. law firm Fladgate, said in a statement to Forbes. While Microsoft may have “scored a ‘win’” in June when the EU Commission said it was dropping its probe into Microsoft and Open AI, the powerful regulator made it clear it was still looking at the relationships between companies in the AI space and it remains “very much focussed on the complex web of interrelationships that big tech has created with AI providers.” With that in mind, Haffner said there’s a need for “Microsoft and others to carefully consider how they structure these arrangements going forward.”

Key Background

While Big Tech thrived under minimal antitrust scrutiny for a decade, Silicon Valley’s giants have found their immense influence and size under pressure from global competition regulators in recent years, including the Federal Trade Commission in the U.S. Investigations and enforcement have focused on areas central to the digital economy and include the way tech companies like Apple and Google dominate online marketplaces and apps; the way firms like Meta approach privacy and advertising; and anti-competitive acquisitions, such as Microsoft’s $69 billion purchase of gaming studio Blizzard. The boom of interest in generative AI, kickstarted with the launch of OpenAI’s chatbot assistant ChatGPT in late 2022, has prompted a race to develop increasingly sophisticated AI tools that has consumed tech giants and upstarts alike. It has produced tools like OpenAI’s Sora, Google’s Gemini, Microsoft’s Copilot, Adobe’s Firefly and Anthropic’s Claude and sparked fears of the technology’s implications on jobs and its ability to spread misinformation. Antitrust regulators are concerned over the potential of giant players like chipmaker Nvidia, Microsoft and Amazon hindering smaller players. Microsoft, for example, has found itself under scrutiny in Europe and the U.S. for its AI dealmaking, which includes a $13 billion investment in OpenAI and its $4 billion “acqui-hire” of startup Inflection, Google faces a probe over plans to preinstall its Gemini AI on Samsung phones and Amazon for its $4 billion investment in Anthropic.

Forbes Valuation

Altman has an estimated net worth of $1 billion. His fortune primarily comes from his role as a venture investor and not from OpenAI, which he does not have equity in. Before starting OpenAI, Altman founded social mapping company Loopt and was a partner and president at tech startup accelerator Y Combinator, which he left in order to focus on the AI startup. His investments include stakes in fintech darling Stripe, social media platform Reddit and nuclear fusion venture Helion.

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Further Reading

ForbesApple Promises AI Privacy: Here’s Why It Claims Its AI Tech Will Be More Secure Than CompetitorsBy Robert Hart
ForbesChina Thrashes U.S. In Global AI Patent Race-Here’s Why That Doesn’t Mean It’s Winning The AI WarBy Robert HartForbesAnthropic’s Claude: What To Know About ChatGPT Rival After Latest Model Trounces Industry GiantsBy Robert HartForbesSam Altman Wasn’t Fired From Y Combinator, Founder Says-As OpenAI Chief Faces Criticism From Ex-Board MemberBy Robert Hart