OpenAI Declares No More Observers as Microsoft Exits Its Observer Role

Months after Microsoft secured a non-voting observer seat on OpenAI’s board, the tech giant has decided to step away from this position. In a letter sent to OpenAI on Tuesday, Microsoft expressed confidence in the AI company's progress and its future direction, as reported by Axios.

Following this transition, OpenAI announced that it would no longer have observer roles on its board, effectively sidelining any speculation about Apple potentially obtaining an observer seat. “We appreciate Microsoft’s faith in our Board and the company’s trajectory, and we anticipate continuing our fruitful partnership,” OpenAI stated.

Under the leadership of CFO Sarah Friar, OpenAI is implementing a new strategy aimed at engaging key partners like Microsoft and Apple, alongside investors such as Thrive Capital and Khosla Ventures.

Microsoft first assumed the observer role after Sam Altman was dismissed and subsequently reinstated last year. This significant leadership change led to a board reshuffling, with notable members now including former Salesforce co-CEO Bret Taylor; former Treasury Secretary Larry Summers; Instacart CEO Fidji Simo; ex-Executive Vice President of Sony, Nicole Seligman; former CEO of the Bill & Melinda Gates Foundation, Sue Desmond-Hellmann; former NSA director Paul Nakasone; and Sam Altman, alongside Quora CEO Adam D’Angelo.

Since these shifts at OpenAI, several top researchers, such as Andrej Karpathy and Ilya Sutskever, have departed. Following his exit, Sutskever launched a new AI venture named Safe Superintelligence Inc., dedicated to enhancing AI safety.

Despite relinquishing its observer status, Microsoft retains a 49% stake in for-profit OpenAI, stemming from nearly $13 billion in investments. This significant partnership has raised concerns about potential antitrust implications in the EU, as reported by Reuters in April.

Margrethe Vestager, the EU’s executive vice president for competition policy, recently warned against allowing such investments to turn into a mechanism for Big Tech companies to exert control over other firms. “Microsoft has invested $13 billion in OpenAI over the years. However, we must ensure that partnerships like this do not disguise one partner's gaining control over the other,” she remarked in a recent speech.

Alex Haffner, a competition partner at Fladgate in the U.K., indicated that Microsoft is likely being cautious to avoid additional regulatory scrutiny regarding its investments. “It’s difficult not to view Microsoft’s decision as heavily influenced by the ongoing competition and antitrust examination of how major tech players interact with emerging AI companies like OpenAI”.