European antitrust regulators are reportedly not going to pursue a formal investigation into Microsoft’s huge investment in generative artificial intelligence (AI) leader OpenAI.
In January European Union regulators had said they were looking into whether Microsoft’s financial backing of OpenAI is subject to EU merger rules.
“The European Commission is checking whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation,” the European Commission said back in January.
Antitrust issue?
It came after the UK regulator, the CMA, in December had begun seeking feedback about the relationship between Microsoft and OpenAI, and whether it had any antitrust implications.
Microsoft’s investment of up to $13 billion (£10bn) into OpenAI had peaked the interest of both antitrust regulators.
But now Bloomberg, citing people familiar with the matter, reported that Microsoft’s colossal investment in OpenAI will avoid a formal investigation, easing concerns of an EU order to unwind the tie-up, or other potential onerous remedies for Microsoft.
According to Bloomberg, the European Commission decided that the tie-up doesn’t merit a formal probe because it falls short of a takeover, and Microsoft doesn’t control the direction of OpenAI.
Microsoft has previously stated that it does not own any portion of the ChatGPT maker.
Deep relationship
But Microsoft does have a deep relationship with OpenAI, as evidenced by its stance during a high profile dispute in November that began with OpenAI chief executive Sam Altman being abruptly fired by OpenAI’s previous board of directors.
Microsoft immediately stepped in and hired Altman and other close colleagues, even offered jobs to many OpenAI staff who had threatened to resign en mass. There were reports at the time that Redmond had even begun preparing an empty office for OpenAI staff to migrate to.
During the chaos of Altman’s firing, Microsoft CEO Satya Nadella also publicly intervened and pushed for Altman’s reinstatement.
Satya Nadella called for a “change” in the governance of OpenAI. “At this point, I think it’s very, very clear that something has to change around the governance” of OpenAI, Nadella told CNBC.
Microsoft’s pressure resulted in the previous not-for-profit board resigning, and Sam Altman was reinstated as CEO.
Microsoft took a non-voting observer seat on the company’s new board of directors.
Other issues
Despite not facing an EU antitrust investigation, Microsoft and OpenAI are not clear from potential scrutiny in the European Union.
The European Commission and the UK’s CMA are still looking into partnerships between large digital market players and generative AI developers and providers that could lead to intrusive and lengthy investigations in their market power.
The Microsoft-OpenAI partnership is also under informal scrutiny in other regions.
Besides the UK’s Competition and Markets Authority reviewing whether to launch a probe to see if the deal affects competition among British firms, the US Justice Department and the Federal Trade Commission are reportedly considering an investigation.
In February year, Microsoft announced a pact with Paris-based Mistral AI, which saw it make a 15-million euro ($16 million) investment in Mistral, and will make the company’s AI models available via its Azure cloud computing platform as part of the multi-year partnership.
That small funding will reportedly convert into an equity stake in Mistral AI’s next funding round, which has prompted some EU lawmakers to demand an investigation into what they see as a concentration of power by the tech giant.
