Microsoft, OpenAI partnership under scrutiny from UK competition regulator

by Rebecca Klar - 12/08/23 1:56 PM ET

FILE – The Microsoft logo is pictured outside the headquarters in Paris, on Jan. 8, 2021. Microsoft said Thursday Aug. 31, 2023 its will stop combining its Teams messaging and videoconferencing app with its Office productivity software for European customers, in a move to head off a possible European Union antitrust penalty. (AP Photo/Thibault Camus, File)

The U.K.’s Competition and Markets Authority (CMA) is starting an initial review of Microsoft’s partnership with ChatGPT-maker OpenAI, the agency announced Friday.

The CMA said it is inviting each company and interested third parties to comment on whether the partnership, “including recent developments,” has “resulted in a relevant merger situation.”

Microsoft made a multibillion-dollar investment in OpenAI and secured a nonvoting position on the artificial intelligence (AI) company’s board.

The invitation to comment is the first part of the regulator’s information-gathering process and comes before any launch of a formal investigation.

The update marks the first public step a global regulator has taken to examine the partnership between the companies.

Microsoft invested heavily in OpenAI earlier this year and has incorporated ChatGPT into Microsoft tools, including its Bing search engine.

Last month, the partnership escalated when Microsoft secured a nonvoting position on the OpenAI board as part of a new deal where OpenAI founder and CEO Sam Altman was brought back after the former board ousted him in a surprise move.

Altman was hired by Microsoft in the tumultuous days between his ousting and his rehiring.

The CMA will review if the partnership has resulted in an “acquisition control,” with one party having “material influence”

In response to the announcement, Brad Smith, Microsoft’s vice chair and president, said through the partnership, both companies have maintained their independence and called out rival company Google’s 2014 acquisition of the AI company DeepMind.

“Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies. 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. We will work closely with the CMA to provide all the information it needs,” Smith said in a statement.

Tags Brad Smith ChatGPT Microsoft Microsoft OpenAI OpenAI Sam Altman