AI: "Look Ma, No Hands!". RTZ #414
...no more board 'Observer' seats, just regular 'partner' meetings
It almost evokes a laid back, ‘Look Ma, No Hands!’ strategy.
Another Big Tech/AI company Partnership Governance practice seems to be evolving in this AI Tech Wave, this time almost concurrently. In the wake of greater antitrust and anti-M&A biases of US and EU regulatory authorities, both Microsoft and Apple seem to have changed their minds on holding board Observer seats with their seminal AI partner, OpenAI.
As the FT explains in “Microsoft and Apple drop OpenAI seats amid antitrust scrutiny”:
“Microsoft has given up its seat as an observer on the board of OpenAI while Apple will not take up a similar position, amid growing scrutiny by global regulators of Big Tech’s investments in AI start-ups. Microsoft, which has invested $13bn in the maker of the generative AI chatbot ChatGPT, said in a letter to OpenAI that its withdrawal from its board role would be “effective immediately”.”
“Apple had also been expected to take an observer role on OpenAI’s board as part of a deal to integrate ChatGPT into the iPhone maker’s devices, but would not do so, according to a person with direct knowledge of the matter. Apple declined to comment.”
“OpenAI would instead host regular meetings with partners such as Microsoft and Apple and investors Thrive Capital and Khosla Ventures — part of “a new approach to informing and engaging key strategic partners” under Sarah Friar, the former Nextdoor boss who was hired as its first chief financial officer last month, an OpenAI spokesperson said.” “
“The move also comes as antitrust authorities in the EU and US examine the partnership between Microsoft and OpenAI as part of broader concerns about competition in the rapidly growing sector.”
As Axios also observed on the Microsoft/OpenAI front:
“Why it matters: Microsoft pushed for the spot after the November ouster of Sam Altman. The company played a key behind-the-scenes role in securing Altman's return and changes to the company's governance.”
“Driving the news: In a letter to OpenAI seen by Axios, Microsoft said it was confirming its decision to give up the seat, effective immediately — an indication that the move had already been discussed with the company.”
"We appreciate the support shown by OpenAI leadership and the OpenAI board as we made this decision," Microsoft said.
"As you know, we accepted the non-voting board observer role at a time when OpenAI was in the process of rebuilding its board," Microsoft said in the letter. "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."
"Over the past eight months we have witnessed significant progress from 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 added.”
Again, as with the trend in AI ‘Aqui-Hires’ at scale that I’ve written about, two data points seem to be pointing to a trend. This time as well routing around what regulators are increasingly frowning upon.
It further supports my thesis that big tech also need to consider ‘Spin-Off’ opportunities for some of its critical businesses, to avail themselves of all opportunities in this AI Tech Wave. It’s a long road ahead with unique headwinds vs prior tech waves. Stay tuned.
(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)