In the wake of OpenAI’s recent internal strife resulting in the abrupt departure and return of CEO Sam Altman, Microsoft’s collaboration with the ChatGPT creator is now under the watchful eyes of antitrust regulators in both the United States and the United Kingdom. This partnership, marked by Microsoft’s substantial backing of OpenAI, has triggered concerns about potential anti-competitive practices.
Microsoft, a significant supporter of OpenAI, has secured a non-voting observer position on OpenAI’s board following a tumultuous episode in the startup’s leadership. The sudden reshuffling of the board led to Microsoft’s representative gaining the ability to attend board meetings and access confidential information, albeit without voting rights on critical matters.
The companies remain tight-lipped about the identity of Microsoft’s representative in the non-voting position and the final composition of OpenAI’s board. OpenAI, initially a non-profit entity, expanded its structure in 2019 by establishing a for-profit subsidiary, in which Microsoft reportedly holds a 49% stake. However, Microsoft disputes these details, emphasizing the confidentiality of the agreement, denying ownership of any portion of OpenAI, and asserting its entitlement to a share of profits.
Microsoft’s commitment to inject over $10 billion into OpenAI has positioned it as a frontrunner in the race for dominance in the rapidly advancing field of artificial intelligence, challenging rivals such as Google. The UK Competition and Markets Authority (CMA) is now contemplating whether to launch a formal investigation into Microsoft’s investment to assess its potential impact on competition in the UK.
Simultaneously, the US Federal Trade Commission (FTC) is conducting preliminary inquiries into the partnership, exploring whether it might violate antitrust laws. Microsoft’s President, Brad Smith, clarified that the recent development merely involves Microsoft gaining a non-voting observer status on OpenAI’s board, distinguishing it from Google’s outright acquisition of DeepMind in 2014.
Amid concerns over the increasing concentration of power in the AI sector, Max von Thun, Europe director at the Open Markets Institute, advocates for swift action by antitrust authorities. He emphasizes the necessity of investigating and, if required, unwinding such deals to safeguard competition and prevent the monopolization of critical emerging technologies.
European Union antitrust regulators are closely monitoring the situation, and the UK’s CMA has invited relevant parties, including Google, to provide input on the review by January 3, 2024. Even if a full probe is not pursued, the preliminary investigation is expected to inform the CMA’s broader oversight of the rapidly evolving AI industry.
This development comes in the context of Microsoft’s recent encounters with antitrust concerns, notably in its $69 billion acquisition of the video game maker Activision Blizzard. The CMA initially opposed the deal but later approved it after Microsoft adjusted its acquisition plan.
As regulators delve into the Microsoft and OpenAI collaboration, the outcome may significantly influence the trajectory of AI development and competition in the technology landscape.
