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EU to probe Microsoft's $10B investment in OpenAI

Microsoft's $10 billion partnership with ChatGPT maker OpenAI was dealt a new blow Tuesday after European Union regulators announced they were looking into whether the investment comes under the remit of its anti-trust powers to investigate tie-ups that could limit competition. File photo by Wu Hao/EPA-EFE
Microsoft's $10 billion partnership with ChatGPT maker OpenAI was dealt a new blow Tuesday after European Union regulators announced they were looking into whether the investment comes under the remit of its anti-trust powers to investigate tie-ups that could limit competition. File photo by Wu Hao/EPA-EFE

Jan. 9 (UPI) -- The European Commission announced Tuesday it was looking into whether U.S. software giant Microsoft's $10 billion partnership with ChatGPT maker OpenAI comes under the remit of its anti-trust powers to investigate tie-ups that could limit competition.

The query over whether Microsoft's investment was "reviewable" under the European Union's Merger Regulation was part of a consultative exercise being launched into the competitive landscape of the virtual reality and generative Artificial Intelligence sectors, the commission said in a news release.

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With more than $7.9 billion of new capital investment in AI in the EU in 2023 growing the value of the bloc's "virtual worlds" market to $12 billion, the exponential growth forecast in coming years was likely to have a major impact on how businesses compete, said the commission.

"Virtual worlds and generative AI are rapidly developing. It is fundamental that these new markets stay competitive, and that nothing stands in the way of businesses growing and providing the best and most innovative products to consumers," said Margrethe Vestager, EU Commission executive vice president in charge of competition policy.

"We are inviting businesses and experts to tell us about any competition issues that they may perceive in these industries, whilst also closely monitoring AI partnerships to ensure they do not unduly distort market dynamics."

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The commission said it might follow up the consultation with a workshop in the second quarter of the year to bring together the different perspectives gathered from contributors.

However, it stressed it was also investigating into "the impact on market dynamics" of other partnership deals between large players in the digital market and AI developers and was not singling out Microsoft for scrutiny.

British regulators launched a similar preliminary probe in December into whether Microsoft's $10 billion investment in OpenAI over a period of years was, in fact, a merger that could lead to a "substantial lessening of competition."

The Competition and Markets Authority's four-week so-called "invitation to comment" consultation asked Microsoft and OpenAI and third parties to opine on the tie-up and its potential impact on Britain's AI market.

The scrutiny comes on top of a Dec. 27 lawsuit by The New York Times seeking billions of dollars in statutory and actual damages from Microsoft and OpenAI for unlawful use of its content and alleging their business model is based on mass copyright infringement.

The suit alleges the companies' AI tools "rely on large-language models that were built by copying and using millions of The Times's copyrighted news articles, in-depth investigations, opinion pieces, reviews, how-to guides, and more."

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