What you need to know
- The US Federal Trade Commission will look at Microsoft and OpenAI to see if the two companies have violated antitrust laws, according to reports.
- These are only preliminary inquiries, and the FTC has not opened an official investigation at this time.
- The UK Competition and Markets Authority announced earlier today that it will look into Microsoft and OpenAI's partnership as well.
Yet another governing body will take a closer look at Microsoft and OpenAI. This morning, the UK Competition and Markets Authority (CMA) announced plans to examine the partnership. Now, the US Federal Trade Commission (FTC) will look into it as well.
While the CMA announced its plans formally, we don't have an official announcement from the FTC yet. Instead, Bloomberg reported on the inquiries based on sources familiar with the matter. The FTC will make preliminary inquiries regarding if OpenAI and Microsoft violated antitrust laws, but it has not opened a formal investigation yet.
According to Bloomberg's sources, Microsoft did not report its investment in OpenAI to the FTC because the transaction did not give Microsoft control of OpenAI.
Microsoft and OpenAI
Microsoft and OpenAI are extremely close, and they're intertwined in a unique way for companies of their size. Microsoft has invested $13 billion in OpenAI, according to reports, and $10 billion of that was said to have been invested in 2023. Microsoft also holds a 49% stake in the for-profit arm of OpenAI and a non-voting seat on the OpenAI board.
The non-voting seat of Microsoft on the OpenAI board was a recent addition after the chaos that followed OpenAI CEO and co-founder Sam Altman's surprise firing and subsequent rehiring. Within less than a week, Altman was fired from OpenAI, offered a job at Microsoft to lead a newly formed AI advanced research team, and then rehired by OpenAI after a board restructuring.
During that eventful period, over 700 of OpenAI's 770 employees threatened to leave the company and work for Microsoft if Altman was not reinstated.
All of the drama and investment is on top of the fact that Microsoft and OpenAI work closely together regarding AI. Copilot, which Microsoft is rolling out to Windows, Edge, and Microsoft 365, uses OpenAI tech. Microsoft's Azure is the exclusive cloud partner of OpenAI as well.
While it's unclear if there will be a formal investigation, it's not surprising that the FTC would want to take a closer look at OpenAI and Microsoft.
Microsoft vs FTC
Those who have followed Microsoft may have groaned when they heard about the FTC looking into the tech giant again. The FTC is still trying to block Microsoft's acquisition of Activision Blizzard despite the fact that the deal has already gone through. That Microsoft vs FTC saga surrounding Activision Blizzard spanned several years and still isn't over, though it seems likely the deal will be allowed to stand.
While court cases and legal battles can feel tedious, they are an important part of regulating businesses. Microsoft and OpenAI are on the forefront of artificial intelligence, and there needs to be competition in the space to ensure an even playing field and to protect consumers.
