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Microsoft’s biggest investment of the year 2023 may be in trouble. The UK’s Competition and Markets Authority (CMA) announced on Friday, December 8, that it is reviewing whether to launch a merger probe of Microsoft’s investment in ChatGPT maker OpenAI, while the US Federal Trade Commission (FTC) is also examining the deal. This means that Microsoft’s big investment in ChatGPT, made earlier this year, is facing challenges in both the US and UK.Microsoft has invested some $13 billion in OpenAI and integrated its products into its core businesses.
The scrutiny comes in the wake of the recent dramatic boardroom battle at OpenAI that saw the ouster and return of CEO Sam Altman. Microsoft, which owns a 49% stake in OpenAI, has committed to investing more than $10 billion in the company.
What’s at stake for Microsoft and OpenAI
UK’s CMA and US’ FTC are concerned that Microsoft’s investment in OpenAI could give the software giant too much control over OpenAI and its technology. This could harm competition in the AI market, as other companies may find it difficult to compete with Microsoft’s deep pockets and access to OpenAI’s resources. The speed at which AI technology is growing is unprecedented, and the CMA believes that this is a pivotal moment in the development of this technology.
What are the regulators doing
The CMA has invited interested parties to submit their comments on the deal by January 3, 2024. The FTC’s inquiries are still in the preliminary stage, and it has not yet opened a formal investigation.
What has Microsoft said
Microsoft has defended its partnership with OpenAI, arguing that it will help to ensure that AI technology is developed responsibly and safely. The company has also said that it will work closely with the CMA and the FTC to address their concerns. Taking a swipe at Google, Microsoft vice-chair and president Brad Smith in a statement, “The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK.”
What are the potential consequences
If the CMA or the FTC decides that Microsoft’s investment in OpenAI violates antitrust laws, they could order Microsoft to sell its stake in the company or impose other restrictions on the partnership.
What’s next
It is still too early to say what the outcome of the investigations will be. However, it is clear that Microsoft’s partnership with OpenAI is under close scrutiny from antitrust regulators in both the UK and the US. The move by the UK and US also raises the question of whether antitrust regulators in the European Union will launch a similar probe. When asked to comment on the CMA’s move, a European Commission spokesperson said that the regulator had been “following the situation of control over OpenAI very closely.”
The scrutiny comes in the wake of the recent dramatic boardroom battle at OpenAI that saw the ouster and return of CEO Sam Altman. Microsoft, which owns a 49% stake in OpenAI, has committed to investing more than $10 billion in the company.
What’s at stake for Microsoft and OpenAI
UK’s CMA and US’ FTC are concerned that Microsoft’s investment in OpenAI could give the software giant too much control over OpenAI and its technology. This could harm competition in the AI market, as other companies may find it difficult to compete with Microsoft’s deep pockets and access to OpenAI’s resources. The speed at which AI technology is growing is unprecedented, and the CMA believes that this is a pivotal moment in the development of this technology.
What are the regulators doing
The CMA has invited interested parties to submit their comments on the deal by January 3, 2024. The FTC’s inquiries are still in the preliminary stage, and it has not yet opened a formal investigation.
What has Microsoft said
Microsoft has defended its partnership with OpenAI, arguing that it will help to ensure that AI technology is developed responsibly and safely. The company has also said that it will work closely with the CMA and the FTC to address their concerns. Taking a swipe at Google, Microsoft vice-chair and president Brad Smith in a statement, “The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK.”
What are the potential consequences
If the CMA or the FTC decides that Microsoft’s investment in OpenAI violates antitrust laws, they could order Microsoft to sell its stake in the company or impose other restrictions on the partnership.
What’s next
It is still too early to say what the outcome of the investigations will be. However, it is clear that Microsoft’s partnership with OpenAI is under close scrutiny from antitrust regulators in both the UK and the US. The move by the UK and US also raises the question of whether antitrust regulators in the European Union will launch a similar probe. When asked to comment on the CMA’s move, a European Commission spokesperson said that the regulator had been “following the situation of control over OpenAI very closely.”
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