UK Antitrust Watchdog Examines Microsoft's Partnership With OpenAI

Tyler Durden's Photo
by Tyler Durden
Friday, Dec 08, 2023 - 12:45 PM

Microsoft and OpenAI's multibillion-dollar partnership is under scrutiny from the UK's Competition and Markets Authority over potential competition concerns. 

In a statement Friday, CMA said it's considering whether Microsoft's partnership with ChatGPT-creator OpenAI is effectively a merger. It said it had begun an "information gathering process," which typically comes before an investigation. 

"There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft. In light of these developments, the CMA is now issuing an ITC [Invitation to Comment] to determine whether the Microsoft / OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition," CMA said. 

Last month, Sam Altman, founder of OpenAI, was abruptly terminated by the company's board. However, he rejoined the company a week later following a threatened mass exodus by most staff. This incident led to a shakeup of the board, resulting in Microsoft, which owns a 49% share in OpenAI, gaining one board member seat. 

CMA also said the pace of AI technology is "unrivaled in economic history" and that conversational generative artificial intelligence chatbots like OpenAI's ChatGPT or Elon Musk's xAI's Grok represent a "pivotal moment in the development of this transformative technology."

"The invitation to comment is the first part of the CMA's information gathering process and comes in advance of launching any phase 1 investigation, which would only happen once the CMA has received the information it needs from the partnership parties," Sorcha O'Carroll, senior director for mergers at the CMA, said in a statement.

Microsoft President and Vice Chair Brad Smith responded to the CMA news, telling The Wall Street Journal

"Since 2019, we've forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies. The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI's board, which is very different from an acquisition." 

CMA has investigated Microsoft before. Earlier this year, it blocked the takeover of Activision Blizzard until Microsoft changed the deal to sell cloud gaming rights outside Europe to Ubisoft.