“Exploring the Future of AI: The UK Regulator Launches Inquiry into Microsoft and OpenAI Partnership”
Last month, the management turmoil at OpenAI concluded with co-founder Sam Altman reinstated within a week of his surprise dismissal, and a much bigger role for Microsoft in the company. This led to the UK’s Competition and Markets Authority launching a new inquiry into whether the partnership between Microsoft and OpenAI constitutes a “relevant merger situation.”
The inquiry, which includes a formal “Invitation to Comment,” is open to both companies and interested third parties. The CMA is gathering feedback to determine its next steps, which could potentially involve taking measures to de-couple the two entities.
The “relevant merger situation” category covers a wide range of relationships where the association between two parties effectively influences competition in the market, regardless of whether a company is being acquired or merged outright. This includes minority shareholding and commercial arrangements, both of which are present in the Microsoft-OpenAI relationship.
Microsoft’s significant investment in OpenAI, which gives it just under 50% of the business, as well as their collaboration in developing AI services, has led to the CMA’s heightened attention. The CMA is concerned that a handful of companies are making it difficult to compete in the development and operation of powerful foundation models for artificial intelligence.
The partnership between Microsoft and OpenAI represents a close and multi-faceted relationship between two firms with significant activities in foundation models and related markets, which is why the UK regulator is shining a spotlight on the potential consequences of this partnership.
Regardless of whether the inquiry escalates into a full investigation of the Microsoft/OpenAI partnership under relevant-merger rules, it gives the CMA an opportunity to better understand the governance arrangements underlying the OpenAI project and informs its broader oversight of the rapidly developing AI sector.
The regulator’s decision to consider investigating the partnership is particularly interesting given the wider concerns about the regulation of AI, suggesting that these developments could have far-reaching implications for the future of AI technology.
