OpenAI and Microsoft partnership comes under scrutiny by UK antitrust authorities, US also begins unofficial investigation
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The UK Competition and Markets Authority (CMA) announced on December 8, 2023 that it will hear opinions from stakeholders regarding the partnership between Microsoft and OpenAI. In the background, there are concerns that the closeness between OpenAI and Microsoft following the sudden ouster and return of CEO Sam Altman will develop into a relationship that will affect competition in the AI market.
CMA seeks views on Microsoft's partnership with OpenAI - GOV.UK
https://www.gov.uk/government/news/cma-seeks-views-on-microsofts-partnership-with-openai
OpenAI, Microsoft Tie-Up Facing UK Antitrust Scrutiny - Bloomberg
https://www.bloomberg.com/news/articles/2023-12-08/microsoft-open-ai-tie-up-facing-uk-antitrust-scrutiny
Microsoft, OpenAI tie-up comes under antitrust scrutiny | Reuters
https://www.reuters.com/world/uk/uk-antitrust-regulator-considering-microsoft-openai-partnership-2023-12-08/
The turmoil that began with the sudden dismissal of CEO Sam Altman on November 17, 2023 ended with Mr. Altman's reinstatement and reorganization of the board of directors . During this process, Microsoft was deeply involved in personnel affairs at OpenAI, with Microsoft CEO Satya Nadella leading negotiations regarding Mr. Altman's departure and departure, and announcing that Microsoft would accept members of OpenAI, including Mr. Altman. The reality of the situation has emerged.
Microsoft announces the joining of Sam Altman and other former OpenAI members - GIGAZINE
by Johannes Marliem
Regarding the latest controversy centered around the two leading AI companies in a partnership, the CMA said, ``Whether the partnership between Microsoft and OpenAI, including recent developments, has resulted in a ``relevant merger situation'' and, if so, the We will provide parties and interested third parties with an early opportunity to express their views on how the merger could affect competition in the UK.'' announced that it had started.
“Related merger situations” are transactions where two or more companies cease to exist as separate entities, and where the transaction results in sales exceeding 70 million pounds (approximately 12.8 billion yen) or a market share A score of 25% or higher is the standard for the CMA to start an examination.
Sorcha O'Carroll, CMA's senior director of mergers, said the consultation will be conducted prior to the first stage of the investigation and is the first part of the CMA's information gathering process.
The focus of the investigation is the extent of Microsoft's control over OpenAI. OpenAI's parent organization is a non-profit organization and is rarely subject to antitrust laws, but Microsoft holds a 49% stake in the for-profit subsidiary established in 2019.
In addition, due to the management structure reforms mentioned above, Microsoft has gained an observer status with regard to OpenAI. As a result, although Microsoft does not have voting rights to vote on matters such as the appointment of directors, it is now possible to have Microsoft representatives attend OpenAI board meetings and obtain confidential information.
The CMA determines whether “the partnership resulted in the acquisition of control, that is, whether one party ended up having significant influence, de facto control, or more than 50% of the voting rights over the other; We will consider whether the nature of the control that one party has over the other has changed.'
Meanwhile, Microsoft President Brad Smith said in a media statement: 'The only thing that has changed is that Microsoft will now sit on OpenAI's board as a non-voting observer. It's not the same as a complete acquisition.' OpenAI also did not respond to media requests for comment.
U.S. regulators are also closely monitoring the developments between OpenAI and Microsoft, and foreign media outlet Bloomberg quoted a source who requested anonymity as saying, ``The Federal Trade Commission (FTC) is investigating the nature of Microsoft's investment in OpenAI. , has launched an informal preliminary investigation into whether it may violate antitrust laws.''
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