UK watchdog drops competition review of Microsoft's OpenAI partnership
The UK's competition watchdog will not hold a formal investigation into Microsoft's partnership with the startup behind the artificial intelligence chatbot ChatGPT, stating that while the $2.9tn (£2.3tn) tech company has 'material influence' over OpenAI it does not control it.
The Competition and Markets Authority said Microsoft, OpenAI's biggest financial backer with a $13bn investment, acquired material influence over the San Francisco-based business in 2019 but did not exercise de facto control over it – and therefore did not meet the threshold for an official inquiry.
The decision follows expressions of disquiet over the appointment of the former boss of Amazon UK, Doug Gurr, as the CMA's interim chair. The organisation's chief executive, Sarah Cardell, has also said the CMA does not want to create a 'chilling effect' on business confidence, amid pressure from the UK government on regulators to produce pro-growth proposals.
The CMA's executive director for mergers, Joel Bamford, said: 'We have found that there has not been a change of control by Microsoft from material influence to de facto control over OpenAI. Because this change of control has not happened, the partnership in its current form does not qualify for review under the UK's merger control regime.'
However, Bamford added that the decision should 'not be read as the partnership being given a clean bill of health on competition concerns'.
The CMA started investigating the OpenAI relationship after the dramatic sacking and reinstatement of Sam Altman as OpenAI's chief executive – over a hectic few days in November 2023, Microsoft announced it had hired Altman, only for him to rejoin the startup.
The CMA highlighted a recent reduction in OpenAI's reliance on Microsoft for computer power – a key factor in operating an AI business – as an influence over its decision.
A Microsoft spokesperson said the partnership with OpenAI and its continued evolution 'promote competition, innovation, and responsible AI development … We welcome the CMA's conclusion, after careful and prudent consideration of the commercial realities, to close its investigation.'
Last year, the CMA decided not to investigate Amazon's investment in the AI firm Anthropic and further Microsoft partnerships with the AI firms Mistral and Inflection.
Microsoft recently contributed to a funding round that raised $6.6bn for OpenAI and valued the business at $157bn. OpenAI is run by a non-profit board but has a for-profit subsidiary, in which Microsoft is the biggest backer, with returns to investors and employees capped.
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Despite concerns over Gurr's appointment and the CMA's efforts to avoid a 'chilling effect' on the economy, the CMA did target big tech with investigations in January, the month that Gurr was appointed. Google is being investigated over its dominance in internet search and search advertising, while it is also conducting a separate inquiry on the impact of Apple and Google's mobile platforms on consumers and businesses.
In January, Microsoft said the CMA was making a 'fundamental mistake' in its investigation into the cloud market, after the watchdog said the tech firm was making it harder for Google and Amazon to compete effectively for customers in cloud computing, the term for providing IT services such as data storage and computing power over the internet with a pay-as-you-go pricing structure.
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