UK Regulator Targets Microsoft-OpenAI Deal


UK Regulator Targets Microsoft-OpenAI Deal
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The United Kingdom's Competition and Markets Authority (CMA) is considering launching a merger investigation into the collaboration between Microsoft and OpenAI, the creator of ChatGPT. This move follows the disclosure that Microsoft would hold a non-voting board seat at OpenAI.

Announced on Friday, Dec. 8, the investigation aims to determine whether the collaboration amounts to an “acquisition of control,” which implies a significant influence of one entity over another. The CMA's inquiry will assess the nature of the partnership and its potential impact on competition in the tech industry. “In light of these developments, the CMA is now issuing an ITC 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,” a statement from the regulator noted.

This scrutiny marks the second time this year that the UK regulator has examined Microsoft's operations. The investigation will explore if the deal between Microsoft and OpenAI leads to a relevant merger situation, which could have broader implications for market dynamics.

Microsoft's Response and Commitment to Cooperation

In response to the potential investigation, Microsoft vice chair and president Brad Smith took to the X platform (formerly Twitter) to clarify the nature of their relationship with OpenAI.

Smith emphasized that Microsoft's role is limited to a non-voting observer on OpenAI's Board, distinguishing it from more direct acquisitions such as Google's purchase of DeepMind in the UK. "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," Smith stated.

He also reassured that Microsoft is prepared to work closely with the CMA, providing all necessary information for the investigation.

The CMA's decision to potentially investigate the Microsoft-OpenAI partnership underscores the increasing scrutiny of big tech collaborations and their impact on competition and market control.

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