OpenAI saga continues as UK considers antitrust probe into its Microsoft partnership

ANKARA, TURKIYE - NOVEMBER 21: In this photo illustration, the logo of Microsoft is displayed on a mobile phone screen in front of OpenAI logo in Ankara, Turkiye on November 21, 2023. (Photo by Berke Bayur/Anadolu via Getty Images)

The relationship between Microsoft and OpenAI is under scrutiny from the UK’s Competition and Markets Authority.Berke Bayur/Anadolu/Getty ImagesCNN — 

The UK government is considering an antitrust probe of Microsoft’s relationship with OpenAI, saying the deal that resolved a recent and dramatic leadership crisis at the AI startup raises questions about possible impacts to competition.

UK regulators at the country’s Competition and Markets Authority said Friday that they are soliciting public feedback on whether to initiate an investigation to determine if the “close, multi-faceted relationship” between Microsoft and OpenAI might constitute a “relevant merger.”

Microsoft, in a statement, said OpenAI will remain an independent company.

“Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies,” Brad Smith, Microsoft vice chairman and president, responded with a post on X, the platform formerly known as Twitter. “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.”

In a statement, an OpenAI spokesperson said: “Our partnership with Microsoft empowers us to pursue our research and develop safe and beneficial AI tools for everyone, while remaining independent and operating competitively. Their non-voting board observer does not provide them with governing authority or control over OpenAI’s operations.”

The announcement reflects rising antitrust scrutiny of Microsoft in the UK. The CMA has probed Microsoft on multiple fronts, including on its practices in cloud services and on its merger with video game giant Activision Blizzard, which was approved this fall after Microsoft made adjustments to the deal.

Microsoft has invested billions of dollars into OpenAI and moved to integrate its technology into Microsoft services. Microsoft CEO Satya Nadella has said the two companies are deeply integrated, and in a blog post following a tumultuous week of events last month — in which OpenAI CEO Sam Altman was summarily fired, and then rehired — Altman announced that Microsoft would be gaining a non-voting seat on OpenAI’s board.

“There is no OpenAI without Microsoft leaning in, in a deep way, to partner with this company on their mission,” Nadella told CNN contributor Kara Swisher on Swisher’s podcast in November. Nadella quickly added: “We love their mission; we even love their independence. We have no issues with it.”

“There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft,” the CMA said Friday in a blog post. “In light of these developments, the CMA is now issuing an ITC [invitation to comment] to determine whether the Microsoft / OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition.”

The proposed investigation would look into whether Microsoft has “de facto control” over OpenAI, the CMA said. The agency’s process typically begins with an invitation to comment, followed by the launch of a first-phase investigation and, if necessary, an in-depth phase-two probe.

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