UK Watchdog Ends Probe into Microsoft-OpenAI Partnership

Britain’s Competition and Markets Authority (CMA) announced on Wednesday that it has dropped its investigation into Microsoft’s partnership with OpenAI, determining that the tech giant does not exert the level of control over the artificial intelligence company that would warrant further scrutiny, according to Reuters.

The collaboration between Microsoft and OpenAI, which dates back to a $1 billion investment in 2019, has drawn antitrust attention in both the United Kingdom and the United States. Concerns over OpenAI’s governance structure intensified following the brief departure and subsequent reinstatement of CEO Sam Altman in 2023. Per Reuters, this upheaval raised questions about Microsoft’s potential influence over the AI firm.

The CMA acknowledged that Microsoft had acquired “material influence” over OpenAI with its initial investment but determined that it had not since gained de facto control. As a result, the watchdog concluded that the partnership did not meet the criteria for further review under the UK’s merger control regulations. However, the CMA clarified that its decision “does not constitute a finding that no competition concerns arise from its operation.”

Related: FTC, DOJ Weigh Antitrust Issues in Musk’s OpenAI Case

A Microsoft spokesperson responded positively to the decision, stating that the company’s collaboration with OpenAI fosters competition, innovation, and the responsible development of artificial intelligence. “We welcome the CMA’s conclusion, after careful and prudent consideration of the commercial realities, to close its investigation,” the spokesperson said, per Reuters.

The CMA has been actively monitoring partnerships between major tech companies and AI startups, including Microsoft’s ties with Mistral AI, as well as Amazon and Google’s investments in Anthropic. However, none of these alliances have so far met the necessary threshold for a full-scale investigation under the agency’s merger control authority.

Earlier this year, the CMA gained expanded powers to scrutinize the largest technology firms if they are deemed to have “strategic market status.” The regulator has already launched inquiries into Apple’s and Google’s smartphone ecosystems, as well as Google’s search services. Analysts and legal experts have suggested that the appointment of former Amazon executive Doug Gurr as interim chair in January could indicate a more lenient approach to deal-making moving forward.

Source: Reuters