Britain takes first step toward antitrust probe of Microsoft-OpenAI partnership

Dec. 8 (UPI) -- Britain's antitrust regulator fired the opening salvo Friday of a possible investigation into whether Microsoft's $10 billion investment in ChatGPT developer OpenAI is, in fact, a merger that could lead to a "substantial lessening of competition."

Launching the so-called "invitation to comment" consultation was an opportunity for Microsoft and OpenAI and third parties to opine on the partnership and its potential impact on Britain's AI market, the Competition and Markets Authority said in a news release.

"The invitation to comment is the first part of the CMA's information-gathering process and comes in advance of launching any phase 1 investigation, which would only happen once the CMA has received the information it needs from the partnership parties," said CMA senior director for mergers Sorcha O'Carroll.

The four-week ITC is to determine whether Microsoft has effectively acquired control of OpenAI, defined by the CMA as having material influence, de facto control or more than 50% of the voting rights.

The investment, collaboration in technology development and exclusive provision of Microsoft cloud services to OpenAI represented "a close, multi-faceted relationship" with "significant activities in foundation models and related markets," together with Microsoft's involvement in governance changes, all pointed to a potential merger situation, the CMA said.

Pledging to cooperate fully with the CMA, Microsoft President and Vice Chair Brad Smith said both companies remained independent and that the relationship bore no resemblance to Google's 2014 acquisition of British AI lab DeepMind.

"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 U.K. We will work closely with the CMA to provide all the information it needs."

The British action comes two weeks after OpenAI founders Sam Altman and Greg Brockman were fired by the board, prompting a revolt by staff who threatened to quit in protest. Most of the board members were then removed before a newly appointed board re-hired Altman and Brockman days later.

In October, after extracting a series of concessions from Microsoft, the CMA withdrew its objections to the U.S. software giant's planned takeover of Call of Duty video game maker Activision, praising the revised deal as a "gamechanger that would promote competition."

British approval was the final hurdle that cleared the way for completion of the $69 billion acquisition, having already been given the green light by the European Union and United States.