‘Looking at the evidence in the round (including the recent changes), we have found that there has not been a change of control by Microsoft from material influence to de facto control over OpenAI’
The Competition and Markets Authority (CMA) has announced that Microsoft’s close partnership with OpenAI will not be subjected to further scrutiny under the current merger regulations.
In late 2023, the CMA probed the tech giant’s increasing ties with OpenAI in order to determine if Microsoft’s status as a key investor in the AI company could pose a threat to the competitive marketplace. Despite the initial $1bn investment ballooning to over $14bn, which gave Microsoft significant sway over OpenAI, the CMA found no evidence of Microsoft exercising de facto control over the AI firm.
Consequently, the watchdog has concluded that the collaboration does not call for action under the Enterprise Act’s merger rules. Joel Bamford, top dog for mergers at the CMA, stated: “The CMA’s aim with the Microsoft/OpenAI review was to determine whether a potential increase in Microsoft’s control has occurred and, if so, whether that could raise competition concerns affecting UK consumers and businesses.
“Through the course of our investigation, we concluded (and Microsoft agreed) that Microsoft acquired material influence over OpenAI in 2019. So, the question we had to answer was whether there has been a change from material influence to de facto control in the way Microsoft exercises its rights in the partnership.
“Looking at the evidence in the round (including the recent changes), we have found that there has not been a change of control by Microsoft from material influence to de facto control over OpenAI. Because this change of control has not happened, the partnership in its current form does not qualify for review under the UK’s merger control regime.”
However, Mr Bamford cautioned that this decision should “not be read as the partnership being given a clean bill of health on competition concerns”.
The CMA, with its history of investigating big tech firms and their connections with budding AI companies, has previously signalled alarm about large tech corporations massively funding new AI startups and forging AI-centric partnerships. The authority warns that these moves are a strategy for dominant companies to entrench power and assets within the rapidly evolving AI industry.
Last year, the watchdog highlighted over 90 such alignments and strategic investments between some leading tech behemoths and AI newcomers, characterising these relationships as an “interconnected web”. It has also probed into several such agreements involving titans like Apple, Google, Microsoft, and Amazon.
