OpenAI CEO Sam Altman appears on a mobile device screen in Warsaw, Poland.
Nearly eight months after Microsoft secured non-voting seats on OpenAI’s board, and within weeks of Apple securing a similar non-voting seat, both tech giants have opted out of their roles on OpenAI’s board. The moves have left many wondering what caused this sharp reversal and why it happened so soon after their initial engagement and announcements.
Most reports focus on the regulatory spotlight on Apple and Microsoft and their relationship with OpenAI. However, there are a few more factors to consider.
First, it’s important to note that taking seats on a board with non-voting rights is unconventional, and that was both Microsoft and Apple’s agreement with OpenAI. Why are such seats unconventional?
- Non-voting seats have limited influence.
- There is limited accountability and responsibility for governance that shareholders, employees and regulators expect.
- Voting rights ensure that all board members are aligned with the organization’s strategic direction and decisions. Non-voting members are unnecessarily limited to strategic direction and decisions.
Second, OpenAI spokesman Steven Sharp expressed the organization’s gratitude to Microsoft, praised Microsoft, saying: “We are grateful to Microsoft for the trust in the Board of Directors and the direction of the company, and we look forward to our successful cooperation.” That diplomatic response, however, came after Microsoft made one public statement at OpenAI, “we are witnessing significant progress from the newly formed board and are confident in the company’s direction, making the continued role of observers unnecessary.”
Does this imply that at some point Microsoft didn’t trust the way OpenAI was working and wanted to keep a closer eye on the company? Considering that Apple took a similar position on OpenAI’s board just weeks ago with no clear signs of concern or need for operational oversight, there is further speculation.
Third, no company goes out of business completely. Sharpe said Microsoft and Apple will attend “regular stakeholder meetings to share progress on our mission and ensure stronger collaboration on safety and security,” the Verge reported.
So the question remains, why did Microsoft and Apple both shy away from their non-voting positions, and why was a new model created where both tech giants would receive “status updates” versus “rights without vote’ in one table?
The strong guess is that both Microsoft and Apple don’t think the juice was worth it.
- There is more control with having “non-voting” board seats.
- Triggered a request to provide documentation for a current in-flight agreement.
That has both tech giants feeling uneasy as global regulators worry about Big Tech’s dominance of new technology. The board seats catalyzed a move under EU antitrust law and could come under scrutiny by the FTC and DOJ.
EU competition chief Margrethe Vestager sent a letter to the tech giants and received replies, after which she said: “We have checked the replies and are now sending a follow-up request for information on the agreement between Microsoft and OpenAI. To understand whether certain exclusivity clauses could have a negative effect on competitors.” Vestager has also said there are concerns that Big Tech may prevent smaller AI developers from reaching users and businesses by limiting the scope, depth and range.
In addition, Vestager went so far as to launch an investigation into Google’s deal with Samsung, a multi-year deal that integrates Google’s genetic AI technology into Samsung’s Galaxy S24 series of smartphones. In a recent interview, Vestager said: “We are also submitting requests for information to better understand the implications of Google’s agreement with Samsung to pre-install the small Gemini Nano model on some Samsung devices.”
All of this means that it’s likely that neither Microsoft nor Apple want to be under the scrutiny and watchful eye of a variety of global AI regulators, so they’ve chosen to retreat from a position that would create too much exposure, too many questions, and potentially to further catalyze a series of investigations that would not bode well for either company.
Furthermore, it suggests that even the most influential players in the tech world are grappling with the challenges and uncertainties surrounding AI development, governance and new regulations. Even the big kids now have to adjust their strategies and participation as the situation demands.
