Microsoft, Apple Relinquish Observer Seats on OpenAI’s Board
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Microsoft, Apple Relinquish Observer Seats on OpenAI’s Board

Story Highlights

Microsoft and Apple have given up their observer seats on OpenAI’s board, suggesting heightened regulatory scrutiny.

Tech giants Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) have reportedly relinquished their observer seats on ChatGPT-maker OpenAI’s board. The observer seat gives the power to visit board meetings and access confidential information of OpenAI but does not have any voting rights.

Microsoft was offered the observer seat back in November 2023, when Sam Altman returned to OpenAI. Meanwhile, Apple was offered the observer seat last month, after it announced the integration of ChatGPT into Apple devices.  

Here’s Why Microsoft is Giving Up the Seat

Microsoft wrote a letter to OpenAI on July 9, stating that it has seen considerable improvement in governance, innovation, and customer growth in the past eight months. Hence, it decided that a “limited role” was not required.

Moreover, reports suggest that heightened regulatory scrutiny of tech companies’ engagement with AI firms could be a reason for this decision. Microsoft has invested nearly $13 billion in OpenAI, representing a 49% stake in the generative artificial intelligence (AI) company. Regulators worry that Microsoft could have a substantial influence on OpenAI’s decision-making.  

Following the receipt of Microsoft’s letter, OpenAI issued a statement confirming that there would not be any observer seats on its board, implying the dismissal of Apple’s role. Meanwhile, OpenAI is building a plan to engage actively and constructively with strategic partners/investors such as Microsoft, Apple, Thrive Capital, and Khosla Ventures.  

Is Microsoft a Buy, Sell, or Hold?

On TipRanks, MSFT stock has a Strong Buy consensus rating backed by 33 Buys and one Hold rating. The average Microsoft price target of $501.40 implies 9.1% upside potential from current levels. Year-to-date, MSFT shares have gained over 22%.

Is Apple a Buy or Sell Right Now?

With 24 Buys, 10 Holds, and one Sell rating, AAPL stock has a Moderate Buy consensus rating on TipRanks. The average Apple price target of $221.21 implies 3.3% downside potential from current levels.AAPL shares have gained over 19%.


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