The European Commission announced on Tuesday that it was investigating the nature of the relationship between Microsoft and ChatGPT creator OpenAI, as the latter’s recent firing and reinstatement as CEO highlighted close ties between the companies, Euractiv reported.
Microsoft has invested a total of $13 billion in OpenAI. However, as the terms of the partnership are not known publicly, global competition regulators are questioning whether Microsoft’s involvement in the company constitutes an acquisition.
The EU Commission announced Tuesday it was examining Microsoft’s investments and whether they should be reviewed under the EU Merger Regulation. It allows the Commission to assess mergers and acquisitions of companies with a turnover above a certain threshold to block mergers that would hinder fair competition in the European Economic Area.
The UK Competition and Markets Authority (CMA) has also invited interested third parties to comment on Microsoft’s ongoing partnership with OpenAI.
OpenAI’s board sacked CEO Sam Altman at the end of November, with other members leaving the firm in protest. Questions over the relationship between the two companies arose when it was revealed that Microsoft had hired its co-founders Altman and Greg Brockman to lead a “new advanced AI research team.”
Later the same week, OpenAI announced on X that they “have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board.” Microsoft is believed to have played a crucial role in Altman’s reinstatement.
The EU Commission sent out two calls for participation and requests for information on Tuesday. Margrethe Vestager, Executive Vice-President in charge of competition policy, stated on Tuesday:
“It is fundamental that these new markets stay competitive, and that nothing stands in the way of businesses growing and providing the best and most innovative products to consumers. We are inviting businesses and experts to tell us about any competition issues that they may perceive in these industries, whilst also closely monitoring AI partnerships to ensure they do not unduly distort market dynamics.”
The questions cover the main drivers of competition in the generative AI market, the role of data, the business model underpinning these systems, what competition issues may arise, whether vertical integration of generative AI systems can provide a competitive advantage and whether the emergence of these technologies may require adaptation of legal antitrust concepts.
A coalition of civil society organisations consisting of the Irish Council for Civil Liberties (ICCL), The Open Markets Institute (OMI), Foxglove, Balanced Economy Project, Rebalance Now, ARTICLE 19, and Mozilla Foundation, submitted their response to the CMA’s “invitation to comment” on Monday. They stated that Microsoft’s influence over OpenAI “goes far beyond” a financial investment.
“As OpenAI’s exclusive cloud provider, Microsoft can prevent its cloud rivals from doing business with OpenAI while enjoying a significant and consistent revenue stream. Microsoft also appears to benefit from privileged access to OpenAI’s technology and the ability to license this technology on its behalf.”
Parties may submit their responses to the Commission by March 11, 2024.
