UK Regulator: Microsoft's OpenAI Deal Not Subject to Probe

# openai # CMA

Britain's competition watchdog, the Competition and Markets Authority (CMA), announced on Wednesday that Microsoft's collaboration with OpenAI won't be probed under the merger rules of the U.K.'s Enterprise Act 2002, which tackles anticompetitive behavior. "After reviewing all the evidence, the CMA doesn't think Microsoft has control over OpenAI's business decisions, though it does have a significant influence," the CMA stated in its ruling. "There's no change in control that would trigger a merger situation." The CMA kicked off its probe into Microsoft's ties with OpenAI back in December 2023. Microsoft, a major backer of OpenAI, has poured nearly $14 billion into the AI firm since 2019. They also bundle OpenAI's tech into their Azure OpenAI Service and collaborate on projects like the Copilot chatbot and GitHub Copilot AI coding tool. Initially, the CMA worried that Microsoft might have gained control over OpenAI's commercial moves back in 2019, and this control could have grown after Microsoft helped bring back OpenAI CEO Sam Altman in November 2023. The CMA feared this could seriously dent competition in the U.K.'s AI sector. "More control by Microsoft over OpenAI could raise competition issues if Microsoft could limit other companies' access to OpenAI's top models in markets where AI is key and where Microsoft is already a big player," the CMA noted in a document. "We were also concerned about the partnership's impact on the growing market for accelerated computing, considering OpenAI's role as a major customer." However, the CMA's latest decision suggests that recent changes might have actually reduced Microsoft's sway over OpenAI. In January, Microsoft tweaked its cloud computing deal with OpenAI, shifting to a setup where they get the "first right of refusal" for some of OpenAI's workloads. Microsoft also allowed OpenAI to expand its computing resources, including a massive $500 billion U.S. data center deal with SoftBank. Before, Microsoft was OpenAI's only cloud provider. Last year, Microsoft also backed away from taking a seat on OpenAI's board, which could have drawn more regulatory attention. "The nature of the Microsoft partnership has been evolving during our investigation," the CMA mentioned in its decision. "Plus, it's not always clear what separates significant influence from actual control." The CMA has been keeping a close eye on tech giants' investments in AI and AI startups to stop power from getting too concentrated in this new field. Although they've described these big tech-AI startup partnerships as a "web of connections," they haven't found any misconduct yet. In November, the CMA gave the green light to Alphabet's (Google's parent company) dealings with OpenAI's competitor, Anthropic.

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