Competition and Markets Authority (CMA), Britain’s antitrust regulator, has announced its decision to scrutinize Microsoft’s multi-billion dollar partnership with OpenAI. This move marks the regulator’s second examination of Microsoft’s strategic alliances in the current year, reflecting a growing global concern over the concentration of power in the AI sector.
The review comes on the heels of Microsoft’s November announcement, revealing a non-voting position on OpenAI’s board. This decision followed a period of internal strife, including the abrupt removal and subsequent return of OpenAI CEO and founder Sam Altman. The CMA cited recent developments in the governance of OpenAI, particularly those involving Microsoft, as the impetus for this investigation.
Microsoft, having committed to a significant investment of over $10 billion in OpenAI, holds a 49% ownership stake in the for-profit operating company, as per insider sources. Additionally, OpenAI has a non-profit parent organization with a 2% ownership share.
The CMA’s review will delve into whether the Microsoft-OpenAI collaboration has resulted in a merger situation and whether it could potentially harm competition within the UK. The regulator recognizes the unprecedented growth of AI technology and the transformative potential of foundation models like the one supporting ChatGPT, emphasizing the need for careful examination.
Microsoft’s Vice-Chair and President, Brad Smith, highlighted that the only recent change is Microsoft’s non-voting observer status on OpenAI’s board, distinguishing it from an acquisition such as Google’s purchase of DeepMind in the UK. Smith expressed Microsoft’s commitment to working closely with the CMA throughout the review process.
The observer position allows Microsoft’s representative to attend OpenAI’s board meetings and access confidential information but lacks voting rights on critical matters, including the election or selection of directors.
Industry experts, such as Max von Thun, Europe Director at Open Markets Institute, stressed the importance of swift action by antitrust authorities to investigate and potentially unwind deals that could lead to monopolization in the rapidly evolving AI sector.
The European Union antitrust regulators have also been closely monitoring the situation at OpenAI, including management changes and Microsoft’s investment. Simultaneously, reports suggest the U.S. Federal Trade Commission (FTC) is examining the nature of Microsoft’s investment and potential violations of antitrust laws.
The CMA’s review will assess whether the recent governance changes at OpenAI, stemming from the Altman affair, have resulted in material alterations and an increased influence by Microsoft. Even if a full probe is not pursued, the preliminary investigation aims to inform the CMA’s broader oversight of the dynamic AI sector.
Interested parties, including industry stakeholders such as Google, have been invited to submit comments by January 3, 2024, as the CMA undertakes this comprehensive review. The regulator’s proactive stance, notably demonstrated by its earlier blocking and subsequent approval of Microsoft’s acquisition of Activision Blizzard, underlines the evolving dynamics of antitrust enforcement in the post-Brexit era. The outcome of this investigation holds implications not only for the Microsoft-OpenAI partnership but also for the broader landscape of AI competition and collaboration in the UK.
