UK Watchdog Scrutinizes Microsoft’s Multibillion-Dollar OpenAI Partnership

• Microsoft’s investment in OpenAI could harm competition in the AI industry.
• The CMA is investigating the partnership and could launch a full investigation.
• Microsoft and OpenAI may have to sell down their stakes in each other to satisfy the CMA.

The UK’s Competition and Markets Authority (CMA) is investigating Microsoft’s multibillion-dollar partnership with OpenAI, the maker of the popular ChatGPT chatbot. The CMA is concerned that the partnership could lead to an acquisition of control of OpenAI by Microsoft, which could harm competition in the AI industry.

Microsoft is a major investor in OpenAI and has committed $10 billion to the company. It is reported to own a 49% stake in OpenAI. The CMA is concerned that this investment gives Microsoft too much control over OpenAI’s technology and could lead to Microsoft using its power to harm competitors.

The CMA has asked interested parties to comment on the arrangement with a view to potentially launching a full investigation. This could mean that Microsoft and OpenAI would have to sell down their stakes in each other or make other changes to their relationship in order to satisfy the CMA.

Microsoft has insisted that it and OpenAI retain independence, but the CMA is not convinced. It is particularly concerned about the recent reinstatement of OpenAI’s boss Sam Altman, who briefly joined Microsoft during his five-day exile from the company. The CMA believes that this shows that Microsoft is trying to exert control over OpenAI.

Microsoft president and vice chair Brad Smith has downplayed the arrangement, saying that it is “very different from an acquisition such as Google’s purchase of DeepMind in the UK”. However, the CMA is clearly concerned about the potential for Microsoft to use its investment in OpenAI to harm competition in the AI industry.

The CMA is closely monitoring the AI industry for potential competition or consumer protection issues. It has already locked horns with Microsoft this year over the company’s $69 billion takeover of gaming giant Activision Blizzard. The CMA finally approved the deal in October, almost two years after it was announced.

It is unclear what the outcome of the CMA’s investigation will be, but it is a clear sign that the UK government is taking a close look at the AI industry and is prepared to take action to protect competition and consumers.

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