The OpenAI Microsoft deal is now in the crosshairs of antitrust
Competition regulators in the UK and US are looking into Microsoft's multibillion-dollar partnership with OpenAI, one of the tech industry's most lucrative tie-ups, as reported by the Financial Times . A deal worth tens of millions of dollars which risks being blocked by the antitrust authorities, and they are not the British one.
Britain's Competition and Markets Authority said on Friday it had launched an "information-gathering process", necessary for a formal investigation likely to begin next year.
“The CMA has decided to investigate and invites submissions,” the agency said.
The U.S. Federal Trade Commission is also looking into Microsoft's investment in the company, according to a person familiar with the matter, although no formal investigation has been launched. The agency declined to comment.
The CMA is the first competition watchdog to launch an official investigation into Microsoft and OpenAI, following last month's upheaval that led to chief executive Sam Altman being ousted from the board and then rehired a few days later. Microsoft, which along with other investors had pushed for Altman's reinstatement, ended up taking a non-voting observer position on OpenAI's board following the bankruptcy. The influence of the American IT giant, however, was evident: without him the Altman story would probably have ended differently.
The CMA said on Friday it had asked the two companies, as well as "any interested parties" such as competitors and customers, whether "the partnership between Microsoft and OpenAI, including recent developments, has given rise to a material concentration situation". The deadline for submitting comments is January 3.
The CMA, which clashed with Microsoft this year over its $75 billion acquisition of video game maker A ctivision Blizzard , has become a formidable obstacle to Big Tech's operations in recent years. Antitrust authorities in Brussels and Washington have also said they are carefully observing developments in the artificial intelligence market.
Microsoft has invested up to $13 billion in OpenAI, making it the largest financier of the creator of ChatGPT.
The deal initially gave Microsoft some exclusive rights to commercialize OpenAI's technology to businesses, though the AI system is now more widely available. In exchange, OpenAI gained access to Microsoft's vast cloud computing resources, essential for building the latest generative AI systems capable of creating human-like prose, computer code and lifelike images with just a few words of instruction. Its large language model, GPT, is trained and made accessible to customers through Microsoft's Azure data centers.
The deal between Microsoft and OpenAI has become a model for Big Tech alliances with AI startups, which need access to large-scale computing power to compete. Anthropic, OpenAI's rival, recently secured billions of dollars in investment from Microsoft's two main cloud computing rivals, Amazon and Google.
OpenAI, which has a complex corporate structure stemming from its nonprofit origins, said Microsoft is a “minority owner” of its “limited profit company,” a subsidiary of its nonprofit holding company.
Among the CMA's first tasks at this stage of the investigation will be to establish whether it has jurisdiction to examine the deal. This may depend on factors such as the size of an investor's shareholding, their ability to influence decision-making or strategic direction, or a change in control.
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The article The OpenAI Microsoft deal now in the crosshairs of antitrust comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/laccordo-openai-microsoft-ora-nel-mirino-dellantitrus/ on Sat, 09 Dec 2023 08:00:11 +0000.