The UK’s Competition and Markets Authority (CMA) has revealed it is looking at whether Microsoft’s partnership with ChatGPT developer OpenAI can be considered a merger.
If the regulator concludes that it can be considered a merger under the provisions of the Enterprise Act 2002, the partnership could be subject to an investigation over its impact on competition within any market in the UK.
The CMA is currently asking for comments from the two companies, as well as interested third parties, to help in its assessment.
The news comes less than a month after OpenAI suffered a leadership crisis that saw its CEO, Sam Altman, being fired and subsequently reinstated to his position within a week.
Microsoft – which has invested billions into the artificial intelligence (AI) startup – played a significant role in Altman’s return, pressing for his reinstatement and even offering him a permanent position at Microsoft should he be unable to return to OpenAI.
Following the upheaval, the company’s new board granted Microsoft a non-voting observer position at OpenAI. This agreement allows a Microsoft representative to attend OpenAI board meetings and access confidential information, but does not provide them with a vote on matters such as electing or choosing directors.
The new relationship, in the CMA’s view, could meet the requirements of a “relevant merger situation”, which include “the acquisition of a minority shareholding or, in some circumstances, commercial arrangements such as outsourcing arrangements”.
In response, Microsoft president Brad Smith said, “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 such as Google’s purchase of DeepMind in the UK.
“We will work closely with the CMA to provide all the information it needs.”
An OpenAI spokesperson said: “Our partnership with Microsoft empowers us to pursue our research and develop safe and beneficial AI tools for everyone, while remaining independent and operating competitively.”
Over the past two years, Microsoft has been the subject of a different CMA investigation in relation to its acquisition of video game maker Activision Blizzard. In October, the watchdog finally cleared the $68.7bn (£55bn) deal, saying its concerns had been alleviated.
The UK watchdog initially blocked the acquisition over worries that it would “alter the future of the fast-growing cloud gaming market”, leading to reduced innovation and fewer choices for UK gamers.
Source: E&T
