Microsoft’s $13 billion investment in OpenAI is unlikely to be considered an “acquisition” in the legal sense of the EU in EU jurisdictions, so it may not trigger EU antitrust regulations.
This means Microsoft is likely to avoid more formal investigative procedures and potential regulatory hurdles as a result of its investment in the Generate AI LLM provider, Reuters reported on Wednesday. That’s what it means.
Asked for comment, a European Commission spokesperson said that for a transaction to be “notifiable” to the EC as a merger, it must represent a “permanent” change in control of the affected companies. He said there is.
The spokesperson did not rule out the possibility of a more formal and strict regulatory approach and said the investigation into Microsoft’s contract with OpenAI is ongoing.
“Although this transaction has not been formally notified, the European Commission has been in control of OpenAI since before recent events involving management, such as Microsoft’s role on the OpenAI board and the investment agreement between Microsoft and OpenAI. “We have been monitoring the situation very closely,” the newspaper said. a spokesperson said.
However, the EC has not yet reached the conclusion that the relationship between the two companies has risen to the level of a “change of control” as a result of Microsoft’s investment.
According to a Reuters report on the matter, UK and US antitrust regulators are also still in the preliminary stages of approving the deal, with both the UK Competition and Markets Authority and the US Department of Justice and FTC awaiting next steps. It is said that it is believed to be under consideration. Terms of formal review and investigation.
Under EU law, a complete change of control in one company can create a “concentration” that could be subject to antitrust review. According to the Consolidated Jurisdiction Notice, this can be done by obtaining “sole control” of a company, in the sense that one controlling entity can exercise decisive influence over the other.
However, sole control may also turn out to exist on a purely legal or factual basis, reflecting the myriad of board, shareholder and voting arrangements available to companies operating in the EU. For example, a majority of voting rights confers de facto sole control, while a minority shareholder who is likely to win a majority at a general meeting may be considered to have de facto control. .
UK and EU regulators said in January that Microsoft’s investment in OpenAI would be subject to review, despite Microsoft’s insistence that its position on the board was non-voting and therefore had no ownership of OpenAI. Microsoft has been warned that this is a possibility.
Microsoft declined to comment.
