UK’s Competition Watchdog is probing Microsoft and OpenAI collaboration

Britain’s competition watchdog is examining the collaboration between Microsoft and OpenAI to determine if it resembles a merger.

The Competition and Markets Authority (CMA) is inviting input from the involved parties and interested third parties to understand the impact of this partnership on competition within the UK, particularly assessing whether recent developments have led to a situation akin to a merger and its potential repercussions on the market.

In late November, Microsoft disclosed that one of its representatives had gained a non-voting seat on OpenAI’s board.

This announcement followed a period of upheaval within OpenAI, marked by the temporary dismissal and subsequent rehiring of CEO Sam Altman, inciting dissent among staff and investors.

The CMA clarified that conditions constituting a “relevant merger situation” could involve actions such as obtaining a minority shareholding or engaging in certain commercial agreements like outsourcing arrangements.

The watchdog recently highlighted the swift evolution of AI, acknowledging its dual nature of presenting both opportunities and risks to competition and consumer protection.

They stressed the importance of maintaining competition among entities in the AI sector.

Microsoft’s President Brad Smith remarked that the partnership between Microsoft and OpenAI, established in 2019, has facilitated increased AI innovation and competition while ensuring independence for both entities.

Smith emphasized the differentiation between their current arrangement and Google’s acquisition of DeepMind in the UK.

Microsoft is committed to collaborating with the CMA, providing comprehensive information as required. Previously, the CMA had initially halted Microsoft’s $69-billion acquisition of Activision Blizzard over competition concerns but later approved it in October.