Microsoft is once again facing scrutiny from the Competition and Markets Authority (CMA) as it explores a potential partnership with OpenAI. The tech giant has been under the antitrust microscope in recent months due to its dominance in the UK cloud market and its collaboration tool, Microsoft Teams.
The CMA issued an invitation to comment (ITC) on December 8, inviting feedback on the proposed partnership and its potential impact on the AI industry in the UK. The authority is responsible for maintaining competitive markets in the UK, promoting innovation, effective regulation, and sustainable growth. Given the rapid growth of the AI market, it is not surprising that a collaboration between such major players in technology and AI raises concerns about potential anti-competitive behavior.
The ITC is just the initial phase of a potential investigation into whether the partnership between Microsoft and OpenAI results in either party gaining de facto control or more than 50% of the voting rights of the other. Currently, Microsoft holds a 49% ownership stake in OpenAI and has provided over $10 billion in funding.
In its ITC letter, the CMA stated that it is assessing whether the Microsoft/OpenAI partnership, or any modifications to it, creates a relevant merger situation under the Enterprise Act 2002. If such a situation is deemed to exist, the CMA will then examine whether it is likely to substantially diminish competition in any UK market for goods or services.
The ITC period concludes on January 3, 2024, at which point the CMA will decide whether to proceed with a further investigation. If warranted, the investigation will determine if the relevant criteria for a merger situation are met. According to the CMA, these criteria include:
1. Whether the transaction involves the acquisition of one or more enterprises.
2. Whether there has been a change of control over the whole or part of an enterprise.
3. Whether the transaction resulted in, or may be expected to result in, a substantial lessening of competition in any market in the UK.
It remains to be seen whether the CMA will move forward with a full investigation after the ITC period concludes. The outcome of this potential partnership between Microsoft and OpenAI carries significant implications for the AI industry in the UK and beyond.
