Microsoft-OpenAI Partnership Under Scrutiny from UK and US Regulators
The partnership between ChatGPT maker OpenAI and Microsoft is facing examination from regulators in the UK and US, following the recent controversy surrounding OpenAI’s CEO, Sam Altman. Microsoft was granted a non-voting observer position at OpenAI by the new board, which includes Bret Taylor, Larry Summers, and Adam D’Angelo. However, while Microsoft can access confidential information and attend board meetings, it does not possess any voting power.
The UK’s Capital Markets Authority (CMA) has issued an invitation to comment (ITC) to determine if the Microsoft-OpenAI partnership has resulted in a relevant merger situation and its potential impact on competition. The CMA will review whether the partnership has led to an acquisition of control or a change in the nature of control by one entity over another. Microsoft has clarified that it does not own any stake in OpenAI and only has entitlement to a share of profit distributions.
In the US, the Federal Trade Commission (FTC) is also scrutinizing Microsoft’s investment in OpenAI to determine if it violates antitrust laws. FTC Chairwoman Lina Khan has been vocal about potential AI risks, including opening a consumer protection investigation into OpenAI to assess if ChatGPT poses risks to consumer reputations and data. Additionally, Khan is leading an appeal against Microsoft’s acquisition of video game company Activision Blizzard.
Microsoft President Brad Smith maintains that the independence of both companies has been upheld, emphasizing that the only change is Microsoft having a non-voting observer on OpenAI’s board. He assures that Microsoft will cooperate fully with the CMA and provide all necessary information.
These regulatory reviews take place against the backdrop of recent internal turmoil at OpenAI. Following Altman’s dismissal on November 17, Mira Murati was appointed interim CEO before ex-Twitch boss Emmett Shear assumed the role on November 20. Altman was subsequently appointed by Microsoft to lead their advanced AI research team, leading to OpenAI staff threatening to quit unless the board resigned. Ultimately, Altman was reinstated on November 22, resolving the dispute.
The scrutiny faced by OpenAI coincides with the approval by the European Union of the Artificial Intelligence Act, aimed at mitigating risks associated with the rapidly advancing technology.
While Microsoft and OpenAI’s long-term agreement remains intact, the regulators’ assessments will determine the impact of the partnership on competition and potential violations of antitrust laws. Both companies are committed to cooperating fully and providing the necessary information for the reviews.
