The UK Competition and Markets Authority (CMA) has launched an investigation into the relationship between Microsoft and OpenAI, focusing on whether the partnership could be categorized as a “relevant merger situation.” The examination comes as Microsoft becomes a non-voting observer on OpenAI's Board of Directors, post the brief ousting and subsequent reinstatement of OpenAI's CEO, Sam Altman.
The regulatory body has issued an Invitation to Comment (ITC), seeking insights from the parties involved and other stakeholders regarding the Microsoft-OpenAI partnership's implications for the competitive landscape. The CMA is particularly interested in whether Microsoft's role grants it “material influence, de facto control, or more than 50% of the voting rights” within OpenAI.
Microsoft's Stance and Response
In a statement on Twitter addressing the regulatory scrutiny, Microsoft President Brad Smith emphasizes the collaborative nature of the partnership with OpenAI, which has resulted in advancements in AI innovation and competition, while both organizations retain their independence. Smith draws a distinction between Microsoft's current role and acquisitions like Google's of DeepMind, stating that Microsoft's presence on the board as a non-voting observer does not equate to an acquisition.
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…
— Brad Smith (@BradSmi) December 8, 2023
Smith has indicated Microsoft's willingness to cooperate fully with the CMA, providing the required information to aid the investigation. He reiterates the notion that the partnership has been rooted in fostering AI development rather than corporate consolidation.
Looking Ahead
The CMA has indicated that the current investigation is preliminary and precedes any formal Phase 1 inquiry, with no schedule stated for a potential escalation. The outcome of this investigation could set a precedent for similar partnerships in the AI industry and potentially influence future regulatory actions in the UK and beyond. If the CMA concludes that the partnership has created a relevant merger situation with a negative impact on competition, it could have significant implications for both Microsoft and OpenAI, as well as the broader AI market.
