Microsoft ditches OpenAI board seat to avoid scrutiny
Microsoft’s board observer seat and investment in OpenAI had triggered unease among antitrust watchdogs in the European Union, Britain and the US
By Shajil KumarJul 10, 2024
MICROSOFT has ditched its board observer seat at OpenAI in a move aimed at easing US and UK antitrust regulators' concern about the extent of its control over the AI startup amid the soaring popularity of generative artificial intelligence.
Meanwhile, Apple, which last month said it was bringing OpenAI's chatbot ChatGPT to its devices, will not take an observer role on OpenAI's board after being widely expected to do so, the Financial Times reported, citing a person with direct knowledge of the matter. Apple did not respond to a request for comment.
An OpenAI spokesperson said the company would establish a new approach to engaging with stakeholders by hosting regular meetings with strategic partners such as Microsoft and Apple, and investors such as Thrive Capital and Khosla Ventures.
Microsoft took a non-voting, observer position on OpenAI's board in November after OpenAI CEO Sam Altman took back the reins of the company.
The seat meant Microsoft could attend OpenAI's board meetings and access confidential information but had no voting rights on matters including electing or choosing directors.
The observer seat and Microsoft's more than $10 billion (£7.79bn) investment in OpenAI have triggered unease among antitrust watchdogs in the European Union, Britain and the US over how much control it exerts over OpenAI.
The position provided insights into the board's work without compromising its independence, Microsoft said in a letter to OpenAI dated July 9.
It cited OpenAI's new partnerships, innovation, and growing customer base since Altman's return to the startup as reasons for giving up its observer seat.
"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," it said in the letter.
EU antitrust regulators last month said the partnership would not be subjected to the bloc's merger rules because Microsoft does not control OpenAI, but they would instead seek third-party views on the exclusivity clauses in the agreement.
In contrast, British and US antitrust watchdogs continue to have concerns as well as questions about Microsoft's influence over OpenAI and the latter's independence.
Microsoft is making a smart move by dropping the one tangible evidence of possible control over OpenAI, making it harder for antitrust regulators on both sides of the Atlantic to prove otherwise, said an antitrust lawyer who declined to be named due to the sensitivity of the matter.
Britain's Competition and Markets Authority declined to comment.
Microsoft and OpenAI are increasingly competing to sell AI technology to enterprise customers, aiming to generate revenue and demonstrate their independence to regulators to address antitrust concerns.
Additionally, Microsoft is expanding its AI offerings on the Azure platform and has hired Inflection's CEO to head its consumer AI division, a move widely interpreted as an effort to diversify beyond OpenAI. (Reuters)
UK life sciences sector contributed £17.6bn GVA in 2021 and supports 126,000 high-skilled jobs.
Inward life sciences FDI fell by 58 per cent from £1,897m in 2021 to £795m in 2023.
Experts warn NHS underinvestment and NICE pricing rules are deterring innovation and patient access.
Investment gap
Britain is seeking to attract new pharmaceutical investment as part of its plan to strengthen the life sciences sector, Chancellor Rachel Reeves said during meetings in Washington this week. “We do need to make sure that we are an attractive place for pharmaceuticals, and that includes on pricing, but in return for that, we want to see more investment flow to Britain,” Reeves told reporters.
Recent ABPI report, ‘Creating the conditions for investment and growth’, The UK’s pharmaceutical industry is integral to both the country’s health and growth missions, contributing £17.6 billion in direct gross value added (GVA) annually and supporting 126,000 high-skilled jobs across the nation. It also invests more in research and development (R&D) than any other sector. Yet inward life sciences foreign direct investment (FDI) fell by 58per cent, from £1,897 million in 2021 to £795 million in 2023, while pharmaceutical R&D investment in the UK lagged behind global growth trends, costing an estimated £1.3 billion in lost investment in 2023 alone.
Richard Torbett, ABPI Chief Executive, noted “The UK can lead globally in medicines and vaccines, unlocking billions in R&D investment and improving patient access but only if barriers are removed and innovation rewarded.”
The UK invests just 9% of healthcare spending in medicines, compared with 17% in Spain, and only 37% of new medicines are made fully available for their licensed indications, compared to 90% in Germany.
Expert reviews
Shailesh Solanki, executive editor of Pharmacy Business, pointed that “The government’s own review shows the sector is underfunded by about £2 billion per year. To make transformation a reality, this gap must be closed with clear plans for investment in people, premises and technology.”
The National Institute for Health and Care Excellence (NICE) cost-effectiveness threshold £20,000 to £30,000 per Quality-Adjusted Life Year (QALY) — has remained unchanged for over two decades, delaying or deterring new medicine launches. Raising it is viewed as vital to attracting foreign investment, expanding patient access, and maintaining the UK’s global standing in life sciences.
Guy Oliver, General Manager for Bristol Myers Squibb UK and Ireland, noted that " the current VPAG rate is leaving UK patients behind other countries, forcing cuts to NHS partnerships, clinical trials, and workforce despite government growth ambitions".
Reeves’ push for reform, supported by the ABPI’s Competitiveness Framework, underlines Britain’s intent to stay a leading hub for pharmaceutical innovation while ensuring NHS patients will gain faster access to new treatments.
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