By Christian Moess Laursen

Microsoft is relinquishing its position as an observer on artificial-intelligence startup OpenAI's board amid regulatory scrutiny on both sides of the Atlantic of the two tech companies' partnership.

In a letter sent Tuesday to the AI company led by Sam Altman and behind ChatGPT, Microsoft said it had resigned with immediate effect because it believed the board had gained enough stability that Microsoft's involvement was no longer necessary.

"Over the past eight months we have witnessed significant progress by the newly formed board and are confident in the company's direction," it said.

Its role as observer provided insights into the board's transitional work without compromising its independence, Microsoft said.

The observer role was part of a bigger tie up between Microsoft and OpenAI that is facing antitrust scrutiny in the U.S. and Europe. The Federal Trade Commission is investigating whether Microsoft structured the deal to avoid a government antitrust review of the transaction, The Wall Street Journal has previously reported.

The U.K. had earlier said it was looking at whether the partnership should be considered a de facto merger.

Microsoft has defended its long running partnership with OpenAI, saying it has fostered more AI innovation and competition, while preserving independence for both companies. Since the 2022 debut of ChatGPT and a slew of other AI offerings, tech and nontech companies have rushed to sign deals with AI firms like OpenAI, creating a patchwork of alliances across the tech world and through other industries. Apple has also recently partnered with OpenAI to power some new AI functions.

News Corp, owner of The Wall Street Journal and Dow Jones Newswires, has a content-licensing partnership with OpenAI.

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(END) Dow Jones Newswires

07-10-24 0457ET