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UK Competition Watchdog Investigates Microsoft-OpenAI Partnership

 |  December 10, 2023

The UK’s Competition and Markets Authority (CMA) has initiated an investigation into the partnership between Microsoft and OpenAI. The probe seeks to ascertain whether recent developments in their relationship constitute a merger that could significantly influence competition in the UK’s AI sector.

Microsoft’s President, Brad Smith, has sought to allay concerns, emphasizing that the only alteration in their partnership is Microsoft’s acquisition of a non-voting observer position on OpenAI’s board. He drew a distinction between this arrangement and Google’s outright acquisition of DeepMind, underlining the nuanced nature of the collaboration.

The CMA’s Invitation to Comment (ITC) marks the initial step in the authority’s information gathering process, preceding any formal Phase 1 investigation. This move is in line with the CMA’s ongoing commitment to closely monitor partnerships and strategic agreements that could potentially diminish competition in the development or utilization of powerful foundation models (FMs).

The realm of AI is experiencing unprecedented growth and expansion across various applications and markets. The recent report by the CMA on FMs highlighted both opportunities and risks, leading to the proposition of principles aimed at steering the market toward positive outcomes for consumers and businesses. Sustained competition among AI developers is deemed critical to fostering innovation, growth, and responsible practices within the sector.

Read more: Japan Watchdog Looks Into ChatGPT-Maker OpenAI On Data

The Microsoft-OpenAI partnership, characterized by a multi-year, multi-billion dollar investment and collaborative efforts in technology development, has come under the CMA’s scrutiny due to recent governance changes within OpenAI, some of which involve Microsoft. The CMA is now seeking to determine if these alterations have resulted in a relevant merger situation and, if so, to assess the potential impact on competition.

This investigation takes place against the backdrop of the CMA’s commitment to ensuring open and effective competition in the deployment of FMs across a spectrum of downstream activities. As the AI landscape continues to evolve, the regulatory scrutiny of high-profile partnerships underscores the importance of maintaining a competitive environment to foster innovation and safeguard consumer interests. The outcome of this investigation will undoubtedly shape the trajectory of AI development and collaboration in the UK.

Source: Gov UK