UK regulator looks into Microsoft’s partnership with OpenAI

The UK’s competition regulator will look into the partnership between Microsoft and OpenAI, the developer of ChatGPT, including recent developments, to understand the impact the merger could have on competition in the UK.

The Competition and Markets Authority (CMA) is examining whether Microsoft’s association with OpenAI could affect the artificial intelligence (AI) market.

“The Invitation to Comment (ITC) is the first part of the CMA’s information gathering process and comes in advance of any launch of a formal phase 1 investigation,” the market watchdog said in a statement.

There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft.

In light of these developments, the CMA is now issuing an ITC to determine whether the Microsoft /OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition.

Last month, OpenAI board sacked CEO Sam Altman in a dramatic move, Later, Microsoft Chairman and CEO Satya Nadella offered him a job to lead its advanced AI research.

Finally, OpenAI reinstated Altman at the helm, with an entirely new board, thus ending an intense drama.

There are speculations on why Altman was fired in the first place, but nothing concrete has come out as the new board is reviewing the whole saga.

According to the CMA, the speed at which AI is scaling across use cases and markets is unrivalled in economic history, while advances in powerful foundation models (FMs) mean that this is a pivotal moment in the development of this transformative technology.

“Critical among these is the need for sustained competition between AI developers which will help to deliver innovation, growth and responsible practices across the sector, as well as the need for open and effective competition in the deployment of FMs across a range of downstream activities,” said the CMA.

The CMA will review whether the Microsoft-OpenAI partnership has resulted in an acquisition of control — that is, where it results in one party having material influence, de facto control or more than 50 per cent of the voting rights over another entity — or change in the nature of control by one entity over another.

“The invitation to comment is the first part of the CMA’s information gathering process and comes in advance of launching any phase 1 investigation, which would only happen once the CMA has received the information it needs from the partnership parties,” said Sorcha O’Carroll, Senior Director for Mergers at the CMA.