April 19, 2024
Microsoft-OpenAI Collaboration Faces UK Antitrust Scrutiny
Policy & Regulation

Microsoft-OpenAI Collaboration Faces UK Antitrust Scrutiny

The UK’s antitrust regulator, the Competition and Markets Authority (CMA), is contemplating a merger investigation into Microsoft’s substantial collaboration with OpenAI, a multi-billion dollar venture known for creating ChatGPT. Microsoft responded by clarifying its role as a non-voting observer on OpenAI’s board.

The investigation follows OpenAI’s disclosure that Microsoft would hold a non-voting board seat, prompting the CMA to assess whether the collaboration represents an “acquisition of control,” implying significant influence by one party over another. The CMA stated on December 8 that it would issue an Initial Enforcement Order (IEO) to determine if the Microsoft/OpenAI partnership has resulted in a relevant merger situation and, if so, its potential impact on competition.

Microsoft’s non-voting observer position allows its representative to attend OpenAI’s board meetings and access confidential information but does not grant voting rights on matters such as electing or selecting directors. The CMA is reviewing the partnership, considering recent developments, and investigating if it has led to a relevant merger situation.

This development comes after Microsoft’s announcement in November that it would assume a non-voting position on OpenAI’s board. It marks the second time this year that the CMA has examined Microsoft’s operations, with a focus on whether the collaboration resulted in a relevant merger situation.

Brad Smith, Microsoft’s Vice Chair and President, took to the X platform (formerly known as Twitter) to emphasize that the only change in the collaboration is Microsoft’s non-voting observer status on OpenAI’s board. Smith clarified that this arrangement differs from acquisitions, such as Google’s purchase of DeepMind in the UK. Microsoft expressed its willingness to collaborate with the CMA closely.

In January 2023, Microsoft pledged an investment exceeding $10 billion in OpenAI. Additionally, the tech giant is set to launch a $3.2 billion investment in artificial intelligence (AI) infrastructure and training in the United Kingdom, further solidifying its commitment to advancements in AI technology.

Image: Wallpapers.com

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