The US tech behemoth Microsoft and the artificial intelligence startup OpenAI revealed on Friday that Britain’s competition watchdog was investigating whether the relationship resembled a merger.
“The parties and interested third parties” were asked to provide feedback, according to the Competition and Markets Authority (CMA).
In what way has the partnership “including recent developments” “resulted in a relevant merger situation and, if so, the impact that the merger could have on competition in the UK”?
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At the end of November, Microsoft revealed that an observer seat had been awarded to a representative of the software giant on the startup’s board.
That occurred only a few days after the board of OpenAI abruptly ousted CEO Sam Altman on November 17 and then reinstated him after employee and investor backlash.
The CMA clarified that “the acquisition of a minority shareholding or, in some circumstances, commercial arrangements such as outsourcing arrangements” are examples of conditions that fulfill a “relevant merger situation”.
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The CMA has stressed “the need for sustained competition” between industry participants and stated that the quick development of AI posed both benefits and concerns for consumer protection and competition.
Microsoft President Brad Smith provided AFP the following statement: “Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies.”
Microsoft’s non-voting observer status on OpenAI’s board is the sole change, which contrasts sharply with acquisitions like Google’s acquisition of DeepMind in the UK.
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“We will work closely with the CMA to provide all the information it needs,” he stated.
After initially denying the deal due to competition concerns, the CMA in October accepted Xbox manufacturer Microsoft’s $69 billion acquisition of Activision Blizzard, which makes video games including “Call of Duty” and “Candy Crush.”
