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Rachyl Jones

The U.K. just put Microsoft under the spotlight for its partnership with OpenAI

(Credit: Justin Sullivan—Getty Images)

Hi there, it’s Rachyl Jones with the tech team. In the U.K., the target on Microsoft’s back just got a little bigger. 

The U.K. antitrust regulator said on Friday it is considering launching a probe against Microsoft and OpenAI over their multibillion-dollar partnership. Microsoft last month obtained a nonvoting position on OpenAI’s board, following the dramatic ousting and return of OpenAI chief Sam Altman. In light of these governance changes, the Competition and Markets Authority (CMA) is inviting relevant parties to comment on whether the partnership constitutes a “relevant merger situation” that could stifle competition in the U.K. Depending on what information the authority gathers, a formal investigation could follow. 

“The speed at which artificial intelligence (AI) is scaling across use cases and markets is unrivalled in economic history,” the CMA said in a release. Competition in the space is “critical” to ensure safety and growth, it added.

The CMA’s announcement comes just two months after the regulator okayed Microsoft’s $69 billion acquisition of Activision Blizzard, following a hefty review process that ended with Microsoft agreeing to sell off a small part of the business. The EU is also investigating the company for the first time since 2008 over bundling its work messaging app Teams with other Office products, as David Meyer previously covered in Data Sheet.

The big question here is whether Microsoft has control over OpenAI, absent an official acquisition. This “acquisition of control,” as the CMA calls it, can occur when one party has “material influence, de facto control, or more than 50% of the voting rights over another entity.” Earlier this year, Microsoft held a 49% ownership stake in the ChatGPT maker’s for-profit arm, Fortune reported. 

Microsoft’s shiny new board seat is “very different from an acquisition,” vice chair and president Brad Smith posted on X, adding that rival “Google’s purchase of DeepMind in the U.K.” is a better example of an acquisition. The inquiry represents the first time regulators are challenging the $10 billion deal between the two companies, and it could result in interest from other major regulatory powers. 

“The invitation to comment is the first part of the CMA’s information gathering process and comes in advance of launching any phase 1 investigation,” CMA mergers director Sorcha O’Carroll said in a statement. Parties have until Jan. 3 to weigh in.

Rachyl Jones

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Today’s edition was curated by David Meyer.

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