The UK’s Competition and Markets Authority (CMA) has concluded its investigation into the partnership between Microsoft and AI firm OpenAI, the creator of ChatGPT. The competition watchdog determined that while Microsoft holds significant material influence over OpenAI, it does not control the company’s commercial policy.
The initial inquiry was sparked by internal changes at OpenAI, including the temporary dismissal and subsequent reinstatement of CEO Sam Altman in late 2023. Given Microsoft’s key role in facilitating Altman’s reinstatement, the CMA considered it plausible that an investigation could uncover greater control over OpenAI’s commercial policy. In October last year, Microsoft also participated in OpenAI’s funding round, which valued the ChatGPT developer’s business at $157bn.
However, the CMA clarified that despite Microsoft’s significant investment in OpenAI since 2019, the tech giant does not control OpenAI, thus not triggering a merger situation under UK regulations. The regulator further emphasised that this conclusion does not imply the absence of potential competition concerns.
“Overall, taking into account all of the available evidence, particularly in light of recent developments in the Partnership which reduce OpenAI’s reliance on Microsoft for compute, the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, and instead exerts a high level of material influence over that policy,” the CMA said in a statement. “In other words there is no change of control giving rise to a relevant merger situation.”
“We welcome the CMA’s conclusion, after careful and prudent consideration of the commercial realities, to close its investigation,” a Microsoft spokesperson told Reuters.
CMA probing Big Tech’s growing ties with AI Start-ups
The CMA holds the authority to scrutinise various degrees of acquisition control within a company, including transactions where the acquiring party transitions from a lesser to a greater level of control.
Recently, the competition authority has been actively examining the relationships between major tech companies and AI startups, including between Microsoft and Mistral AI, Amazon and Anthropic and Google-owner Alphabet and Anthropic. However, none of these partnerships have reached the threshold of control that would lead to a comprehensive investigation.
In January, CMA said that it may use new powers to investigate AWS and Microsoft following a 14-month investigation in the UK cloud services marketplace.
Read More: Is the CMA capable of regulating big tech’s AI ambitions?
