UK watchdog Competition and Markets Authority and Microsoft are facing off once again, this time over their partnership with OpenAI, the maker of ChatGP. The CMA announced that it is examining the tie-up between the tech giant and OpenAI to determine if it could be considered a merger. This move by the CMA marks the first time any authority has questioned the partnership, but it is expected that regulators from around the world will follow the UK’s lead. The US Federal Trade Commission is reportedly also looking into Microsoft’s investment in OpenAI. This is the second time CMA head Sarah Cardell has challenged Microsoft in recent months, following a public dispute over Microsoft’s £53 billion takeover of Activision Blizzard, the maker of Call Of Duty.
OpenAI, founded in 2015, currently has a 49% stake held by Microsoft after a £10.3 billion investment. However, the CMA is questioning whether a stealthy merger has taken place and if the two companies are truly separate entities. The watchdog has started an information gathering process and plans to investigate the impact that this potential merger would have on Britain’s Artificial Intelligence market. OpenAI has recently experienced a boardroom controversy when founder Sam Altmann was ousted and then quickly reinstated. The CMA is now examining whether Microsoft exercises de facto authority over OpenAI.
A spokesperson for the CMA stated that this investigation is a critical moment for the technology sector, which has a significant and unparalleled impact on the economy. Microsoft President Brad Smith responded to the CMA’s actions, denying that Microsoft has acquired OpenAI. He clarified that the partnership between the two companies has fostered more innovation and competition while preserving the independence of both entities. Smith emphasized that Microsoft’s presence on OpenAI’s board is as a non-voting observer, distinguishing it from acquisitions such as Google’s purchase of DeepMind in the UK.
The CMA’s scrutiny comes just after it resolved a previous dispute with Microsoft over the Activision Blizzard takeover. Initially, the CMA had blocked the deal, citing concerns about competition in the gaming market. However, the authority eventually approved the acquisition after negotiations with Microsoft. Microsoft, OpenAI, and other parties involved have until January 3 to provide comments to the regulator regarding the examination of their partnership.
In conclusion, the Competition and Markets Authority is investigating Microsoft’s partnership with OpenAI to determine if it constitutes a merger. This move by the CMA is the first of its kind, but it is expected that other regulators worldwide will follow suit. Microsoft denies that it has acquired OpenAI and emphasizes the benefits of the partnership for innovation and competition. The CMA’s examination follows its recent dispute resolution with Microsoft over the Activision Blizzard takeover. All parties involved now have the opportunity to provide comments to the regulator before further action is taken.
