The UK’s Competition and Markets Authority (CMA) announced on Wednesday that Microsoft’s partnership with OpenAI does not qualify for an investigation under the UK’s Enterprise Act 2002, which governs anticompetitive practices.The CMA determined that while Microsoft has significant influence over OpenAI, it does not control its commercial policy. “There is no change of control giving rise to a relevant merger situation,” the CMA stated.
Microsoft has invested nearly $14 billion in OpenAI since 2019 and integrates OpenAI’s technology into its Azure OpenAI Service, Copilot chatbot, and GitHub Copilot. The CMA launched its investigation in December 2023 over concerns that Microsoft’s role in OpenAI CEO Sam Altman’s reappointment and its influence could harm competition in the UK’s AI sector.Regulators feared Microsoft’s control could limit competitors’ access to OpenAI’s advanced models, potentially reducing market competition. They also worried about its impact on the supply of accelerated computing, given OpenAI’s potential as a key customer.
However, recent developments suggest Microsoft’s influence over OpenAI has weakened. In January, Microsoft revised its cloud computing agreement, shifting to a “first right of refusal” model instead of being OpenAI’s exclusive cloud provider. Microsoft also granted OpenAI waivers to build additional computing infrastructure, including a $500 billion data center deal with SoftBank.
Additionally, Microsoft abandoned plans to take a board seat at OpenAI, which could have invited regulatory scrutiny. “Material aspects of the partnership have changed during the investigation,” the CMA noted.While the CMA continues to scrutinize AI investments to prevent market dominance, it has yet to find clear evidence of wrongdoing. Last year, it also cleared Google’s parent company, Alphabet, in its dealings with OpenAI competitor Anthropic.
