Thursday, July 11, 2024

Apple and Microsoft take a step back from OpenAI

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ChatGPT and OpenAI logos.OpenAI

Barely a week after news broke that Apple Fellow Phil Schiller would join the OpenAI board in a non-voting observer role, Financial Times reports that the two companies are nixing that plan to avoid potential antitrust scrutiny.

Schiller, who heads Apple’s App store and Apple Events, as well as formerly served as the company’s chief marketer, will instead reportedly receive regular meetings with the AI startup, along with other partners and investors, including Thrive Capital and Khosla Ventures.

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OpenAI currently has an eight-member board that includes former U.S. Treasury Secretary Larry Summers, OpenAI CEO Sam Altman, and most recently, former National Security Agency (NSA) director Paul M. Nakasone. Per Bloomberg, the observer role “allows someone to attend board meetings without being able to vote or exercise other director powers. Observers, however, do gain insights into how decisions are made at the company.”

Schiller was reportedly going to join the board in that capacity as the result of a potential AI partnership between the two companies wherein Apple would host OpenAI’s models as part of its upcoming Apple Intelligence service.

Microsoft, OpenAI’s biggest financial backer (which has invested more than $10 billion in the startup since 2023), was also previously offered a similar board position. However, as Axios reported Tuesday, Microsoft has reportedly seen “significant progress” from OpenAI in the months since Altman’s attempted ouster last November, which prompted Microsoft’s initial push for the position. As a result, it no longer sees the observer role as a necessity.

“We appreciate the support shown by OpenAI leadership and the OpenAI board as we made this decision,” Microsoft wrote in a letter shared with Axios. “As you know, we accepted the non-voting board observer role at a time when OpenAI was in the process of rebuilding its board. This position provided insights into the board’s activities without compromising its independence, and we appreciated the opportunity to serve as an observer during this period of change.”

Both moves come as European and U.S. regulators intensify their investigations into potential antitrust violations surrounding Apple and Microsoft’s dominant positions within the AI market, which could push out smaller firms and create monopoly conditions for these larger companies. Microsoft is already under investigation by U.S. regulators for its sizable investment into OpenAI, as well as by British competition regulators over the observer seat itself.

In response, an OpenAI representative told Financial Times, “While our partnership with Microsoft includes a multibillion-dollar investment, OpenAI remains an entirely independent company governed by the OpenAI Nonprofit.”

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