Microsoft (MSFT) — the largest investor in OpenAI — is deepening its ties with the AI startup. The tech giant has secured a non-voting observer seat on OpenAI's board as Sam Altman officially returns as the startup's CEO. The new board member has yet to be identified.

Yahoo Finance Anchors Seana Smith and Brad Smith discuss why the move gives Microsoft an edge in the AI race.

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Video Transcript

SEANA SMITH: All right, Microsoft snagging a non-voting observer seat on the OpenAI's board. Now, the position, comes with Sam Altman back as CEO after an abrupt and brief ousting. This has all played out over the last several weeks now.

OpenAI's board now consisting of Bret Taylor, Larry Summers, Adam D'Angelo, and a yet to be named Microsoft observer. Now, D'Angelo is the only remaining holdout from the previous board that removed Altman earlier this month. Now, it's important to point out, like we just said there, a non-voting member here of the board just in terms of what this means here for the company, what it means for Microsoft, obviously just furthering the ties between the two. Microsoft largely viewed as a winner of all the drama that has played out with OpenAI going back to Satya Nadella moving very quickly, saying that he would hire Sam Altman here to run Microsoft's, what they were thinking about at the time, newly-created AI team. Now with Altman back at OpenAI and Microsoft as an observing member here of the board, clearly just furthering those ties and also making them even maybe a further leader within this AI race that's playing out.

BRAD SMITH: Yeah, the board restructuring was certainly put forward as one of the ways for a lot of the employees to be retained over at OpenAI as well, who in addition to the rebuke of Sam Altman being ousted in what was an apparent coup by the board at the time, which has now since been reshuffled around and the seats changed over as well. There's a larger consideration that I think for some of the larger and biggest investors into a company in OpenAI, that perhaps Microsoft could have taken the stance before saying that they wanted a board seat. But they decided to let OpenAI early this year, even though they had announced that they were moving forward with this partnership. The dollar sign later came to be reported, about $10 billion over an extended period of time.

Microsoft probably could have pursued that before. They did not. Now, as a result of all of the kerfuffle that came about in most recent weeks, they had to do this ultimately and making sure that in their multi-billion dollar investment, that they've got with OpenAI and this partnership now, that they have a little bit more hands on the reins as this company is core to their own ambitious growth strategy with anything that is annexed to generative AI right now.