Microsoft’s relationship with OpenAI could be subject to antitrust scrutiny by European Union regulators.
As first reported by Reuters, the European Commission may launch an antitrust investigation into Microsoft’s $13 billion investment in OpenAI, and the magazine’s sources say the regulator is not open to such an investigation. He is reported to have said that he is building a basis for this.
Reuters sources noted that the European Commission has decided not to investigate the relationship under EU merger rules, but that a potential antitrust investigation is still being assembled.
This investigation may aim to determine whether the alliance restricts or distorts competition within the EU internal market. However, Reuters sources say the European Commission is reportedly leaning toward investigating the second angle: whether Microsoft’s market power is distorting the market through certain practices.
Sources said no decision had yet been made as the EU’s competition enforcement authorities sought evidence. You may ultimately choose not to initiate an investigation.
Microsoft declined to comment to Reuters, but a spokesperson for the European Commission told the outlet it was considering whether Microsoft’s investment in OpenAI could be reviewed under EU merger regulations.
However, in this regard, it is important to emphasize that in order to investigate potential competition concerns, the Commission must first conclude that there has been a permanent change of control. ”
If the European Commission moves forward with its investigation into Microsoft and Open AI, it will complete a troika of Western regulators investigating the relationship, with the UK’s Competition and Markets Authority (CMA) and US Federal Trade Commission (FTC) also scrutinizing the relationship. It turns out. partnership.
Why are there multiple investigations into Microsoft’s partnership with OpenAI?
Microsoft has invested $13 billion in OpenAI over the past five years, and in November CEO Sam Altman was fired by the OpenAI board but reinstated just four days later after pressure from both countries. recently secured a non-voting position on its board of directors in the wake of the dramatic OpenAI scandal. Both employees and investors.
More than 700 of OpenAI’s 770 employees have said they will resign unless Altman is allowed to return, while Microsoft, the company’s largest investor, has put pressure on the board.
Microsoft released a statement two days after Altman’s firing, announcing that the tech giant had hired both Altman and OpenAI co-founder Greg Brockman to manage a new AI research team. did. More than 700 OpenAI employees said in an open letter to the company’s board that Microsoft had promised them jobs if they followed through on their threats to resign.
Following Mr. Altman’s return, Microsoft secured a non-voting directorship, and also Microsoft CEO Satya Nadella He was vocal about the need to improve OpenAI’s governance.
In December, the CMA sent invitations to comment to both companies. This is the first part of his CMA’s initial review of information gathering and will be posted before a formal stage one investigation begins. The regulator is asking Microsoft, OpenAI, and other relevant third parties whether “recent developments” have led to the partnership becoming a “relevant merger situation.”
The CMA added that it would consider whether the partnership “led to the acquisition of a controlling interest.” The CMA classifies this as when one party has “significant influence, de facto control, or more than 50 per cent of the voting rights of, or a change in, another entity.” By the nature of control by one entity over another. ”
Meanwhile, the FTC’s Generative AI Investments and Partnerships Study, released in January, examined five companies for their recent investments and partnerships involving generative AI companies and prominent cloud service providers, including Microsoft and OpenAI. An order was issued requiring information regarding the partnership to be provided. Same goes for Alphabet, Antropics, and Amazon.
The FTC says the investigation aims to improve the agency’s understanding of investments and partnerships between Gen AI developers and tech giants.
