UK Competition Watchdog Considering an Antitrust Probe into Microsoft’s Links With OpenAI

Microsoft's relationship with OpenAI has drawn the attention of the UK's Competition and Markets Authority, which is considering an antitrust probe into the high-value partnership. The watchdog plans to examine whether the partnership, which might potentially have detrimental impacts on competition, can be considered a merger.

The close relationship between the two tech giants came into the limelight after the dramatic upheaval in OpenAI's leadership last month. Microsoft, however, maintains that OpenAI will continue to be an independent company.

How OpenAI's Leadership Crisis Drew the CMA's Attention

For a long time now, Microsoft has owned a 49% stake in OpenAI, and the two companies are known to operate very closely. Microsoft CEO Satya Nadella has himself mentioned how deeply the two are integrated.

OpenAI received billions of dollars in investment from Microsoft, with the latter going on to integrate OpenAI's technologies into its own services.

However, it was last month's upheaval at OpenAI that led the CMA to consider a probe. Right after the company's board of directors sacked its founder and CEO Sam Altman, he was offered a job at Microsoft. However, Altman was soon reinstated as the CEO of OpenAI, bringing the dramatic crisis to an end.

The watchdog has asked third parties for their input on the collaboration between Microsoft and OpenAI and might possibly initiate a probe if deemed necessary.

Following Sam Altman's return to the company's helm, OpenAI made Microsoft a non-voting observer in the non-profit board governing the firm.

While Microsoft won't have a say in matters like the board's operations or choosing its members, the tech giant will now have access to confidential information.

The turn of events drew the attention of the CMA, which now seeks public feedback on whether to launch an investigation and determine whether the close, multi-faceted relationship" between the two companies might be a UK Competition Watchdog Considering a Probe Into Microsoft's Links With OpenAIant merger".

In a blog post published on Friday, the CMA wrote that its ITC (Invitation to Comment) comes in the light of the recent developments in OpenAI's governance, several of which involved Microsoft. The watchdog expressed its concern about the impact that a relevant merger situation might have on competition.

As revealed by the CMA's senior director for mergers, Sorcha O'Carroll, the ITC is typically the first phase in the agency's process.

It will be followed by a first-phase investigation once the watchdog has the necessary information from the partnership parties. If necessary, the CMA might also carry out a more in-depth, two-phase probe.

Microsoft Refutes the CMA's Concerns, Claims That OpenAI Is Independent

Responding to the CMA's concerns, Microsoft's vice chairman and president Brad Smith took to X to highlight how the company's close partnership with OpenAI has fostered more AI innovation while preserving independence for both companies".

He also went on to point out that Microsoft being offered a non-voting observer seat on OpenAI's board is very different from an acquisition, such as Google purchasing Deepmind in the UK.

An OpenAI spokesperson shared a similar statement, confirming that Microsoft's new seat on the board doesn't give them any control or governing authority over OpenAI's operations.

During a podcast session in November, Nadella said that There is no OpenAI without Microsoft leaning in" with a deep partnership but assured that Microsoft had no qualms about OpenAI's independence.

Whether or not the CMA probe will actually take place remains to be seen, but considering that Microsoft has come under the agency's scrutiny in the past, it's quite likely.

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