Microsoft-OpenAI multi-billion dollar partnership faces antitrust scrutiny
The Federal Trade Commission is reportedly investigating whether Microsoft’s investment in OpenAI violates antitrust laws. This follows the announcement that Britain’s antitrust regulator will also review the partnership, potentially launching a merger probe. Microsoft’s commitment to invest over $10 billion into OpenAI has raised concerns about competition and control. As Microsoft takes a non-voting position on the board, regulators are considering whether this arrangement could harm competition. The companies involved and the regulators have not commented on the investigation.
Microsoft’s involvement with OpenAI has been marked by recent boardroom battles and changes in governance. OpenAI’s CEO and founder, Sam Altman, was suddenly ousted and then reinstated, adding to the uncertainty surrounding the partnership. The Competition and Markets Authority, responsible for the review in Britain, aims to assess whether the OpenAI tie-up constitutes a merger that could potentially harm UK competition.
While Microsoft owns a 49% stake in the for-profit operating company, OpenAI has a non-profit parent that holds 2%. Microsoft’s position on the board grants its representative the ability to attend meetings and access confidential information, although they do not have voting rights on key matters.
Antitrust authorities around the world are closely monitoring deals like this as the use of AI technology expands rapidly. Max von Thun, Europe director at the Open Markets Institute, emphasizes the importance of investigating these deals promptly to safeguard competition and prevent monopolization of emerging AI technology.
The European Union’s antitrust regulators are reportedly monitoring Microsoft’s investment and role in OpenAI. If the initial investigation by the Competition and Markets Authority uncovers significant changes in governance due to recent events surrounding Altman, it may prompt a full probe. Additionally, the preliminary investigation will contribute to the CMA’s oversight of the rapidly evolving AI sector.
The CMA has invited interested parties, including Google, to submit comments by January 3, 2024, as part of their review process. Earlier this year, the CMA gained attention by blocking Microsoft’s $69 billion acquisition of Activision Blizzard but later revised its decision after Microsoft modified its acquisition plan.
The investigation by the Federal Trade Commission and the review by the Competition and Markets Authority highlight growing concerns about Microsoft’s OpenAI partnership and its potential antitrust implications. As the field of AI advances at an unprecedented pace, regulators aim to ensure fair competition and prevent monopolistic practices. Both Microsoft and OpenAI, as well as the regulators involved, have yet to provide official statements regarding these investigations.
