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Microsoft Drops Observer Seat on OpenAI Board Amid Regulatory Scrutiny

Microsoft confident in OpenAI’s direction has dropped observer seat amid regulatory scrutiny over $10 billion investment and control concerns.

Microsoft has relinquished its observer seat on the board of OpenAI, the artificial intelligence startup behind ChatGPT, citing significant improvements in the company’s governance over the past eight months.

The move came after regulatory scrutiny from both sides of the Atlantic, with antitrust watchdogs questioning Microsoft’s influence over OpenAI.

“Over the past eight months, we have witnessed significant progress by the newly formed board and are confident in the company’s direction. Given all of this, we no longer believe our limited role as an observer is necessary,” Microsoft said in a letter to OpenAI.

Microsoft’s observer seat allowed it to attend board meetings and access confidential information, but it did not have voting rights.

The company’s more than $10 billion investment in OpenAI has raised concerns among regulators about its control over the startup.

OpenAI would establish a new engagement approach, hosting regular stakeholder meetings with strategic partners such as Microsoft and Apple, as well as investors like Thrive Capital and Khosla Ventures.

While the European Union has said the partnership does not fall under its merger rules, British and US antitrust watchdogs continue to have concerns about Microsoft’s influence over OpenAI and its independence.

As the competition between Microsoft and OpenAI heats up, both companies aim to generate revenue and demonstrate their independence to regulators.

Boluwatife Enome

Source: Reuters

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