EU considering investigating Microsoft-OpenAI partnership

The European Union (EU) is investigating the partnership between Microsoft and OpenAI to determine if it could necessitate a full merger investigation. This follows increasing scrutiny of OpenAI, known for its significant influence in the AI industry, which experienced a leadership crisis last year leading to the abrupt dismissal and subsequent reinstatement of CEO Sam Altman.

Additionally, Microsoft acquired a non-voting position on OpenAI’s board and invested billions in the company.

This EU action comes on the heels of a similar move by UK antitrust authorities and a Bloomberg report indicating a preliminary probe by the US Federal Trade Commission. Microsoft has maintained their stance, stating that they do not own any part of OpenAI and a board seat does not equate a merger. Equally, OpenAI asserts that Microsoft’s board seat does not give them control over the company’s operations.

The European Commission is investigating whether Microsoft’s investment in AI firm OpenAI might be subject to review under EU Merger Regulation. This is part of a wider effort to scrutinise competition in the AI industry, with business contracts between other AI startups and tech giants also being reviewed.

These deals often involve pledges to use only a few cloud providers, or investments by large tech companies in the form of free cloud computing credits, which critics argue risk “locking in” AI developers.

The Commission is also seeking public feedback on competition in the AI and virtual reality fields and has requested information from several large digital players. Margrethe Vestager, a top EU antitrust official, emphasised the importance of maintaining competitiveness in these rapidly progressing markets.

Microsoft’s investment in OpenAI includes cloud credits and the integration of OpenAI’s technology into Microsoft services. Microsoft CEO Satya Nadella has acknowledged the company’s deep partnership with OpenAI, expressing admiration for their mission and their independence.

The EU’s declaration coincides with forthcoming planned meetings between top EU antitrust official Margrethe Vestager and several tech CEOs in the United States this week, where they will discuss matters relating to competition in the industry.