Competition regulator will not investigate Microsoft partnership with OpenAI
The Competition and Markets Authority said the link-up between the firms does not qualify for investigation under rules around mergers.
The UK’s competition regulator has said Microsoft’s close partnership with OpenAI does not qualify for further investigation under rules around mergers.
The Competition and Markets Authority (CMA) had opened a merger inquiry into the link-up between the two firms in late 2023 to establish whether Microsoft’s position as a major investor with influence over the artificial intelligence (AI) firm could affect competition.
The CMA said that while Microsoft had acquired material influence over OpenAI following an initial one billion dollar investment deal in 2019 – which has since grown further to more than 14 billion dollars – the situation has not changed to Microsoft having de facto control over OpenAI.
As a result, the regulator said the partnership does not qualify for investigation under the merger provisions of the Enterprise Act.
Joel Bamford, executive director of mergers at the CMA, said: “The CMA’s aim with the Microsoft/OpenAI review was to determine whether a potential increase in Microsoft’s control has occurred and, if so, whether that could raise competition concerns affecting UK consumers and businesses.
“The trigger for our investigation was the dismissal and subsequent reinstatement of OpenAI’s CEO in November 2023.
“Through the course of our investigation, we concluded (and Microsoft agreed) that Microsoft acquired material influence over OpenAI in 2019.
“So, the question we had to answer was whether there has been a change from material influence to de facto control in the way Microsoft exercises its rights in the partnership.
“Looking at the evidence in the round (including the recent changes), we have found that there has not been a change of control by Microsoft from material influence to de facto control over OpenAI.
“Because this change of control has not happened, the partnership in its current form does not qualify for review under the UK’s merger control regime.”
However, Mr Bamford added that the decision should “not be read as the partnership being given a clean bill of health on competition concerns”.
The CMA has carried out a string of inquiries into big tech firms and their partnerships with emerging AI companies, and has previously raised concerns around large tech firms investing heavily in emerging AI start-ups and entering into AI-based partnerships with them, warning the process is a way for the biggest companies to consolidate power and resources within the growing AI sector.
Last year, the regulator highlighted more than 90 partnerships and strategic investments between a handful of the same tech giants and AI start-ups in what it called an “interconnected web” – and has previously undertaken inquiries into a number of these deals, which included giants such as Apple, Google, Microsoft, and Amazon.
