UK competition regulator clears Microsoft's US$13b OpenAI investment
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The news: The UK’s Competition and Markets Authority (CMA) announced that Microsoft’s partnership with OpenAI does not qualify for investigation under the UK's competition rules.
The numbers: The CMA began investigating Microsoft’s USD13.75 billion ($21.8 billion) investment into OpenAI in December 2023 on concerns that the partnership may give either of the companies more control or influence over the other.
The context: An update published by the competition watchdog states that the relationship between Microsoft and OpenAI is complex and has continued to evolve during the course of the CMA’s investigation.
It adds that while the terms of the partnership have evolved and the scope of the companies' collaborations have expanded as Microsoft increased its investment in OpenAI, the “CMA does not consider there has been a change of control by Microsoft from material influence to de facto control over OpenAI.”
The decision brings an end to over 14 months of uncertainty for Microsoft, who last week criticised the CMA, accusing them of ignoring how AI is reshaping the tech industry. Responding to the watchdog’s probe into the UK’s £9 billion UK cloud computing market, Microsoft said: “There is a real danger that intervening in the market based on these misunderstandings will backfire, leaving the UK with the opposite of the CMA’s goal of a healthy, well-functioning market, rich in growth and investment.”
Microsoft is also facing scrutiny in the US over its OpenAI investment, where the Federal Trade Commission has raised concerns about the deal’s potential to extend Microsoft’s dominance in cloud computing into the AI market.
What they said: The CMA statement reads: “Overall, taking into account all of the available evidence, particularly in light of recent developments in the Partnership which reduce OpenAI’s reliance on Microsoft for compute, the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, and instead exerts a high level of material influence over that policy. In other words there is no change of control giving rise to a relevant merger situation.”
The sources: CMA press release, Financial Times
