US and UK regulators may scrutinize Microsoft’s OpenAI partnership following $13 billion investment.
According to an individual familiar with the situation, the US Federal Trade Commission is investigating Microsoft Corp.’s investment in OpenAI Inc. to determine if it potentially breaches antitrust regulations.
The inquiries are preliminary and the agency has not opened a formal investigation, according to the person, who declined to be named due to the confidential nature of the matter.
Microsoft did not report the deal to the agency because an investment in OpenAI does not imply control of the company under U.S. law, the person said. OpenAI is a non-profit, and corporate acquisitions are not disclosed under US merger law, regardless of value. Agency officials analyze the situation and evaluate its alternatives.
A spokeswoman for the FTC declined to comment. Microsoft did not immediately respond to a request for comment.
Britain’s Competition and Markets Authority is also gathering information from stakeholders to determine whether the two companies’ collaboration threatens competition in the UK, home to Google’s AI research lab Deepmind. The agency is accepting comments until Jan. 3 before deciding on a formal investigation.
Microsoft has invested about $13 billion in OpenAI and has integrated its products into its core businesses. It has quickly become the undisputed AI leader among the big tech companies, forcing Alphabet Inc’s Google to scramble to catch up.
FTC Chairwoman Lina Khan has spoken out about the concerns raised by AI technology, and the agency is already investigating some aspects. It has launched a consumer protection investigation into OpenAI, questioning whether its popular ChatGPT chat AI bot is putting consumers’ reputations and data at risk.
This investigation into the Microsoft-backed startup marked the first formal study of a technology that has the potential to change almost every aspect of people’s lives and has become almost as fascinating for its potential.
Khan has said that executives “need to be alert in time” with transformative tools like artificial intelligence.
Khan also has Microsoft’s growth in sight. He continues the agency’s challenge to the company’s $69 billion purchase of video game company Activision Blizzard Inc., which the agency is fighting on appeal.
The firing – and subsequent hiring – of Sam Altman as head of OpenAI last month revealed how closely the two companies are intertwined. Microsoft shares fell as much as 2.4% immediately after OpenAI’s board ousted Altman. Microsoft CEO Satya Nadella personally helped negotiate and advocate for his return to the company — at one point offering to hire Altman along with himself and other OpenAI employees who wanted to leave.
The UK move raises the question of whether antitrust authorities in other regions, namely the European Union and the United States, will launch similar investigations. When asked to comment on the CMA’s move, a spokesperson for the European Commission said the regulator had been “monitoring OpenAI’s supervisory situation very closely”.
