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UK examines OpenAI’s links with Microsoft

OpenAI Microsoft CMA Sam Altman at the AI Safety Summit. Image credit: Marcel Grabowski / UK Government

The UK’s competition regulator is asking for industry views on Microsoft’s partnership with ChatGPT maker OpenAI ahead of a potential investigation.

The Competition and Markets Authority (CMA) said it was seeking comments to establish if a “merger situation” had arisen between Microsoft and OpenAI following the recent chaos at the generative AI startup.

Last month Sam Altman was ousted as CEO by the OpenAI board, then quickly reinstated following a staff revolt.

When the dust settled, Microsoft gained a non-voting board seat at OpenAI. The CMA cited “developments in the governance of OpenAI” as a factor in its invitation for comments.

The CMA will review if this – alongside Microsoft’s $10bn investment into OpenAI – has “resulted in an acquisition of control” where Microsoft has “de facto control or more than 50% of the voting rights over another entity”.

Microsoft president Brad Smith said in a statement: “Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies.

“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.”

Smith said the company will “work closely with the CMA to provide all the information it needs”.

“In order to move forward with any investigation, the CMA will need to find evidence that the recent fall-out from the Sam Altman affair has led to material changes in the governance of Open AI and, more specifically, Microsoft’s influence over its affairs,” said Alex Haffner, competition partner at UK law firm Fladgate.

It comes as the CMA is looking more broadly into the foundation model market amid the rise of AI tools like ChatGPT and Google’s Bard.

The early-stage action marks Microsoft’s latest clash with the CMA. In April, the regulator blocked Microsoft’s takeover of gaming giant Activision over concerns it could reduce innovation and consumer choice in the UK cloud gaming market.

That sparked public backlash from Smith, who said the CMA’s decision “discourages technology innovation and investment in the United Kingdom.”

The CMA cleared the merger in October after Microsoft offered a restructured deal to ease the regulator’s concerns.