BRUSSELS, July 10 (Reuters) - Microsoft ( MSFT ) has

ditched its board observer seat at OpenAI in a move aimed at

easing U.S. 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 ( AAPL ), 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 ( AAPL ) 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 ( MSFT ) and Apple ( AAPL ),

and investors such as Thrive Capital and Khosla Ventures.

Microsoft ( MSFT ) 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 ( MSFT ) 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 ( MSFT ) more than $10 billion

investment in OpenAI have triggered unease among antitrust

watchdogs in the European Union, Britain and the U.S. over how

much control it exerts over OpenAI.

The position provided insights into the board's work without

compromising its independence, Microsoft ( MSFT ) 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 ( MSFT ) does not control OpenAI, but they would instead seek

third-party views on the exclusivity clauses in the agreement.

In contrast, British and U.S. antitrust watchdogs continue

to have concerns as well as questions about Microsoft's ( MSFT )

influence over OpenAI and the latter's independence.

Microsoft ( MSFT ) 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 ( MSFT ) 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 ( MSFT ) 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.