The UK’s Competition and Markets Authority (CMA) is asking for comment from relevant parties on whether the partnership between Microsoft and OpenAI has resulted in a merger situation and, if so, the impact that the merger could have on competition in the UK.
The Invitation to Comment (ITC) is the first part of the CMA’s information gathering process and comes in advance of any launch of a formal investigation. It comes following the sacking in November of OpenAI’s CEO Sam Altman. OpenAI reversed its decision and rehired Altman in the face of a threatened mass resignation but following the debacle, Microsoft took a non-voting board seat at OpenAI.
The CMA’s recent report into the rapidly evolving market for foundation models (FMs) noted both opportunities and risks for competition and consumer protection, which were captured in a set of proposed principles. Critical among these is the need for sustained competition between AI developers.
The CMA has been closely monitoring the impact of partnerships and strategic agreements which could result in a weakening of competition in the development or use of FMs. The CMA says that the partnership between Microsoft and OpenAI (including a multi-year, multi-billion dollar investment, collaboration in technology development and exclusive provision of cloud services by Microsoft to OpenAI) represents a close, multi-faceted relationship between two firms with significant activities in FMs and related markets.
In a statement out today (8 December), the CMA said: “There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft. 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.”
The CMA will review whether the partnership has resulted in an acquisition of control.
Sorcha O’Carroll, senior director for mergers at the CMA said: “The invitation to comment is the first part of the CMA’s information gathering process and comes in advance of launching any phase 1 investigation, which would only happen once the CMA has received the information it needs from the partnership parties.”
More information on the CMA’s investigation can be found on the Microsoft / OpenAI partnership merger inquiry case page.