Microsoft and OpenAI’s relationship faces a potential antitrust probe by the European Union’s regulatory body.
As first reported by Reuters, the European Commission might launch an antitrust investigation of Microsoft’s $13 billion investment in OpenAI, with the publication’s sources allegedly saying regulators are building the case for such a probe.
Reuters’ sources noted that the European Commission had decided not to investigate the relationship under EU merger rules but is still assembling a potential antitrust investigation.
This investigation could aim to determine if the partnership restricts or distorts competition within the EU internal market. However, according to a Reuters source, the European Commission is reportedly leaning towards a second angle—investigating whether Microsoft’s market power distorts the market through specific practices.
The sources mentioned that no decision has been made yet, as the EU competition enforcer is seeking evidence. They may ultimately choose not to initiate an investigation.
While Microsoft had declined to comment to Reuters, a spokesperson for the European Commission told the outlet it is considering whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation:
In this respect, it is however important to underline that in order to look into potential competition concerns, the Commission first needs to conclude that there has been a change of control on a lasting basis.”
If the European Commission were to proceed with its probe into Microsoft and OpenAI, it would complete a troika of Western regulatory bodies investigating the relationship, with the UK’s Competition and Markets Authority (CMA) and the US’s Federal Trade Commission (FTC) also scrutinising the partnership.
Why Are There Multiple Investigations Into Microsoft and OpenAI’s Partnership?
Microsoft has invested $13 billion in OpenAI over the past five years and recently secured a nonvoting position on its board following November’s dramatic OpenAI saga in which its CEO, Sam Altman, was ousted by OpenAI’s board before being reinstated just four days later following pressure from both employees and investors.
Over 700 of OpenAI’s 770 workers said they would resign unless Altman were allowed to return, while Microsoft, the Company’s largest investor, exerted pressure on its board.
Microsoft released a statement two days after Altman’s sacking that the tech giant had hired both Altman and his OpenAI Cofounder Greg Brockman to manage a new AI research team. In an open letter to their board, the 700-strong group of OpenAI employees said that Microsoft had promised them jobs if they followed through on their threat of resigning.
In addition to Microsoft securing the nonvoting board position following Altman’s return, Microsoft CEO Satya Nadella was vocal about the need to improve OpenAI’s governance.
In December, the CMA delivered an Invitation to Comment to both businesses. This is the first part of the CMA’s information-gathering initial review and is posted before an official phase one investigation is launched. The regulatory organisation is asking Microsoft, OpenAI, and any other relevant third party whether “recent developments” have seen the partnership grow into a “relevant merger situation”.
The CMA added it would “review whether the partnership has resulted in an acquisition of control,” which the CMA categorises as when one party has “material influence, de facto control or more than 50 percent of the voting rights over another entity—or change in the nature of control by one entity over another.”
Meanwhile, the FTC’s “Inquiry into Generative AI Investments and Partnerships”, announced in January, involved issuing orders to five businesses requiring them to provide information regarding recent investments and partnerships involving Gen AI companies and prominent cloud service providers — including Microsoft and OpenAI, as well as Alphabet, Anthropic and Amazon.
The FTC states that the inquiry aims to enhance the agency’s understanding of the investments and partnerships between Gen AI developers and tech giants.
from UC Today https://ift.tt/1ixQGek
0 Comments