EU intensifies scrutiny on Microsoft’s $13 billion investment in OpenAI
The European Union’s antitrust regulators are ramping up their examination of Microsoft’s whopping $13 billion investment in OpenAI. The focus is primarily on the AI firm’s reliance on Microsoft’s cloud technology and the potential impact this could have on fair competition.
Antitrust watchdogs within the EU are set to delve deeper into Microsoft Corp.’s multi-billion-dollar partnership with OpenAI Inc., honing in on the AI firm’s exclusive utilization of Microsoft’s cloud services. The regulators are looking to gather insights from competitors to determine the implications of OpenAI’s dependency on Microsoft’s cloud technology.
EU’s antitrust chief, Margrethe Vestager, recently confirmed that the deal between Microsoft and OpenAI will not be probed under the bloc’s merger regulations. Instead, the focus is on investigating potential exclusivity clauses between the two entities and how these arrangements might restrict competition in the market.
In addition to the scrutiny on Microsoft, the EU is also probing into Google’s partnership with Samsung Electronics Co., specifically regarding the pre-installation of Google’s Gemini nano model on certain devices.
Vestager highlighted that the EU is keeping a close eye on the tech industry’s strategies to acquire companies through mass hiring practices. The initial inquiries by the EU coincide with the US Federal Trade Commission’s investigation into Microsoft’s recruitment activities, particularly following the hiring of personnel from Inflection.
The agreement between Microsoft and OpenAI dictates that Azure is the designated cloud provider for OpenAI, prompting EU regulators to delve into the potential consequences of such exclusivity.
While Microsoft has welcomed the EU’s thorough review, emphasizing that the investment does not confer control over OpenAI, it remains prepared to address any additional inquiries raised by the European Commission.
The EU’s examination of Microsoft’s involvement with OpenAI stems from controversies surrounding Sam Altman’s reinstatement as chief of OpenAI. The reinstatement occurred following internal strife within the ChatGPT creator, shedding light on the interconnectedness of the two firms.
The alliance between Microsoft and OpenAI is fueled by the growing demand for generative AI tools, necessitating substantial computing power and cloud capabilities. The surge in cloud services and processing requirements for tools like ChatGPT and Google’s Bard has propelled Microsoft’s cloud business to new heights.
Regulators in the UK and the US have also initiated investigations into the Microsoft-OpenAI partnership, focusing on any shifts in power dynamics that could potentially favor one entity over the other.
Microsoft’s history of facing EU antitrust scrutiny is well-documented, with past disputes centered around allegations of market dominance abuse in relation to its Windows platform. This history adds a layer of complexity to the current Microsoft-OpenAI partnership under review.
As the EU intensifies its scrutiny on Microsoft’s $13 billion investment in OpenAI, the tech giant remains under the regulatory spotlight, navigating a landscape accentuated by concerns over fair competition and market exclusivity.
