UK watchdog examining Microsoft’s ties to OpenAI


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The UK’s competition regulator has taken the first steps of an investigation into Microsoft’s multibillion-dollar partnership with OpenAI, one of the tech industry’s most lucrative tie-ups.

The Competition and Markets Authority on Friday said it had begun an “information gathering process”, a necessary precursor to an investigation that is likely to begin next year.

“The CMA has decided to investigate and is inviting comments,” the agency said on its website.

The CMA has asked the two companies, as well as “any interested party” such as competitors and customers, whether “the partnership between Microsoft and OpenAI, including recent developments, has resulted in a relevant merger situation”. The deadline to comment is January 3.

Microsoft recently took a non-voting observer seat on OpenAI’s board following last month’s upheaval at the start-up, when chief executive Sam Altman was ousted and then rehired days later.

Brad Smith, Microsoft’s vice-chair and president, said in a statement that its relationship with OpenAI was “very different from an acquisition”.

Microsoft’s investment of up to $13bn in OpenAI has made it the largest backer of the ChatGPT creator.

The deal granted Microsoft certain exclusive rights to commercialise OpenAI’s technology for corporate clients. In return, as well as billions of dollars in capital, OpenAI gained access to the cloud computing resources it needs to train its large language model, GPT, and an accelerated route to market.

Microsoft has enmeshed OpenAI’s artificial intelligence technology into many of its products, including its Office applications and GitHub coding service.

The arrangement has become a template for Big Tech’s alliances with AI start-ups. OpenAI’s rival Anthropic recently secured billions of dollars in investment from Microsoft’s two main cloud computing rivals, Amazon and Google.

“Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies,” Smith said.

“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,” he added. “We will work closely with the CMA to provide all the information it needs.” 

Sorcha O’Carroll, senior director for mergers at the CMA, said: “The invitation to comment is the first part of the CMA’s information gathering process and comes in advance of launching any phase 1 investigation, which would only happen once the CMA has received the information it needs from the partnership parties.”

OpenAI did not immediately respond to a request for comment.

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