OpenAI quietly removed Microsoft from the list of its minority owners on its website, sparking inquiries from the US Federal Trade Commission (FTC) and the UK Competition and Markets Authority (CMA). Previously, Microsoft was listed as a minority owner, but it is now referred to as having a minority economic interest. The relationship between OpenAI and Microsoft is complex, with billions of dollars of investment from Microsoft, Azure being the exclusive cloud partner of OpenAI, and Microsoft holding a non-voting seat on the OpenAI board. However, questions surrounding the ownership and control of OpenAI have arisen due to the recent firing and rehiring of OpenAI’s CEO and co-founder.
According to insiders, Microsoft has invested a total of $13 billion in OpenAI. While Microsoft has not disclosed the exact amount of its recent investment, reports indicate that it amounted to $10 billion. Despite this significant investment, Microsoft does not own a portion of OpenAI but is entitled to a share of its profits, which reportedly can reach up to 49 percent. OpenAI updated its website without any formal announcement, changing Microsoft’s status from a minority owner to holding a minority economic interest, making the distinction noteworthy.
The change on OpenAI’s website is suspected to be a response to the FTC and CMA investigations into the relationship between the two companies. Both agencies are examining whether the partnership constitutes a relevant merger or has resulted in changes in control and influence. OpenAI and Microsoft’s close relationship, which includes exclusive IP sharing and Azure being the exclusive cloud partner, could face increased scrutiny in light of these investigations.
The unique structure of OpenAI, an organization that functions as both a charity and a for-profit entity, has created tensions between its non-profit and for-profit interests. The rapid growth of ChatGPT and Microsoft’s push for faster commercialization have further complicated matters. While the structure allows backers to receive a share of profits, OpenAI employees have reportedly expressed concerns over Microsoft’s influence and control. The CMA is investigating whether Microsoft’s role in OpenAI constitutes de facto control or a change in the nature of control.
The distinction between Microsoft’s ownership and economic interest in OpenAI remains a point of interest for regulators. OpenAI’s mission to develop and ensure the benefits of artificial general intelligence (AGI) for humanity adds another layer of complexity to the investigation. While Microsoft and OpenAI collaborate in various areas, they are also competitors. Microsoft’s investment in OpenAI grants it exclusive rights and access to certain technologies, but any AGI developed by OpenAI will not be shared with Microsoft.
As the investigations proceed, the outcomes will shed light on the extent of Microsoft’s influence and control over OpenAI. The details of their agreement remain confidential, but it is clear that the FTC and CMA are closely monitoring the relationship between these two tech giants in the AI space.
