US and UK antitrust authorities are examining Microsoft’s collaboration with OpenAI, the creator of ChatGPT.
Antitrust regulators are examining the collaboration between Microsoft and OpenAI for potential violations. The partnership is facing scrutiny to ensure compliance with antitrust laws.
Microsoft’s collaboration with OpenAI, the creator of ChatGPT, is reportedly facing antitrust scrutiny in the US and UK. The British regulator and a media report revealed this development on Friday, following a boardroom dispute at the startup that resulted in the abrupt removal and subsequent reinstatement of CEO Sam Altman.
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Last month’s intense episode led to Microsoft, a key supporter of OpenAI, being granted a non-voting, observer role on OpenAI’s board by a new three-member initial board. Microsoft’s representative can attend board meetings and access confidential information but cannot vote on crucial matters, such as electing directors.
The individuals from Microsoft taking the non-voting position and the final composition of OpenAI’s board remain undisclosed. OpenAI’s parent, a non-profit entity, is seldom subject to antitrust scrutiny. In 2019, it established a for-profit subsidiary, with Microsoft reportedly holding a 49% stake. However, Microsoft disputes this, stating that agreement details are confidential, it doesn’t “own any portion” of OpenAI, and is entitled to a share of profits.
Microsoft has committed over $10 billion to OpenAI, positioning itself as a leader in the AI revenue race against Google’s Alphabet.
The UK Competition and Markets Authority (CMA) is considering whether to investigate Microsoft’s investment for potential harm to UK competition. The US Federal Trade Commission (FTC) is also exploring whether the investment might violate antitrust laws, though these inquiries are preliminary, and no formal investigation has been initiated.
Microsoft President Brad Smith emphasized that the recent change is Microsoft having a non-voting observer on OpenAI’s board, distinguishing it from Google’s acquisition of DeepMind in 2014.
Regulatory probes may increase due to the concentration in AI, warns Max von Thun from Open Markets Institute. European Union antitrust regulators are closely monitoring the control situation. The CMA has invited comments from interested parties like Google on the review, with a deadline of Jan. 3, 2024.
To initiate a full probe, the CMA must find evidence that recent events, like the Altman affair, led to substantial changes in OpenAI’s governance and Microsoft’s influence. Even if a full probe isn’t pursued, the preliminary investigation will aid the CMA’s oversight of the rapidly evolving AI sector.
Microsoft has recently faced antitrust concerns regarding its $69 billion acquisition of Activision Blizzard, where the CMA initially blocked the deal but later approved it after Microsoft revised its acquisition plan.
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