UK Antitrust Probe Considers Microsoft’s Partnership with OpenAI

The collaboration between Microsoft and OpenAI is currently facing scrutiny from the UK’s Competition and Markets Authority (CMA), as concerns arise regarding potential impacts on competition. The UK government is contemplating an antitrust investigation into the recent agreement that resolved a leadership crisis at the AI startup.

Regulators at the CMA announced on Friday that they are seeking public feedback to determine whether the “close, multi-faceted relationship” between Microsoft and OpenAI might be classified as a “relevant merger.” Microsoft responded by asserting that OpenAI will maintain its independence, emphasizing the collaborative efforts since 2019 that have fostered innovation and competition in the field of AI.

Brad Smith, Microsoft’s Vice Chairman and President, clarified in a statement on the X platform (formerly Twitter): “The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s Board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK. We will work closely with the CMA to provide all the information it needs.”

OpenAI also issued a statement, affirming that their partnership with Microsoft enables them to pursue research and develop AI tools independently. The non-voting board observer from Microsoft, according to OpenAI, does not grant them governing authority or control over OpenAI’s operations.

The announcement reflects an increasing level of antitrust scrutiny directed at Microsoft in the UK. The CMA has previously investigated Microsoft’s practices in cloud services and its merger with video game giant Activision Blizzard. Microsoft’s significant investments in OpenAI and efforts to integrate its technology into its services have drawn attention.

The CMA’s proposed investigation will specifically examine whether Microsoft holds “de facto control” over OpenAI. The agency’s process typically involves an initial invitation to comment, followed by a first-phase investigation and, if necessary, a more in-depth phase-two probe. The CMA aims to assess the potential impact of recent governance changes at OpenAI, particularly those involving Microsoft, on competition within the AI sector.