Microsoft, OpenAI partnership draws UK antitrust regulator scrutiny

Microsoft and OpenAI’s partnership, which recently went through a governance meltdown, is facing yet more scrutiny after the UK antitrust watchdog said it’s considering if it should be called in for a full blown investigation. 
 

The Competition and Markets Authority(CMA) said Friday it was seeking views from interested parties over whether the two firms’ recent collaboration could result in UK competition issues. Premarket shares in Microsoft fell 0.5 per cent. 
 

The move from the CMA puts the tech giant under the microscope once again in a way that it largely avoided for decades. Less than two months ago the drama around Microsoft’s acquisition of Activision Blizzard came to end when it eventually approved the gaming deal.
 

Microsoft is the largest backer of OpenAI, having invested $13 billion into the startup so far. The software giant has incorporated several of OpenAI’s products into its suite of enterprise tools, and the startup spends considerable amounts on Microsoft’s cloud services.
 

The relationship was further strengthened after Microsoft swooped in to help deal with the fallout from the dramatic ouster of chief executive officer Sam Altman by the board last month that sent shockwaves through the industry. The CMA said it will look at whether the the balance of power between the two firms has fundamentally shifted to give one side more control or influence over the other. 
 

When asked to comment on the CMA’s move a spokesperson at the European Commission said the regulator had been “following very closely the situation of control over OpenAI.”
 

Brad Smith, Microsoft’s president, said as recently as last month he doesn’t “see a future where Microsoft takes control of OpenAI.”
 

Two days after Altman’s firing, Microsoft CEO Satya Nadella said he planned to hire Altman, and most of OpenAI’s staff threatened to leave for Microsoft unless Altman was reinstated. He was after two of the four board directors stepped down.
 

OpenAI named a three-person interim board, which the company said would select new directors. On November 30, the startup said it would appoint Microsoft as a nonvoting observer to the board.
 

“The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s Board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK,” Smith said.
 

OpenAI didn’t immediately respond to a request for comment.

Microsoft denies taking control of­ OpenAI

 

Microsoft denied on Friday that it had taken control of OpenAI after Britain’s anti-trust regulator said it was reviewing the nature of their partnership.
 

“The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s Board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK,” Microsoft President Brad Smith said in a statement. 
 

"We will work closely with the CMA to provide all the information it needs," he said. (Reuters)