Microsoft under investigation for $10 billion investment in OpenAI

On December 8, the UK Competition and Markets Authority (CMA) said it had gathered information from all parties and opened an investigation into Microsoft. The CMA is concerned that with the $10 billion investment, the world's largest software company will turn its investment in OpenAI into a merger, thereby negatively affecting the development of the AI ​​sector in the UK.

Similarly, the US Federal Trade Commission (FTC) is also determining whether the relationship between the two companies violates antitrust laws.

Since 2019, Microsoft has poured huge sums of money into OpenAI, benefiting from integrating artificial intelligence into many of its core businesses. This move has put Microsoft at the forefront of AI, leaving rivals in a tailspin, but has also put the tech company in trouble with regulators.

CMA’s concerns were compounded when Microsoft joined OpenAI’s board in late November, days after Sam Altman returned to his position as CEO. Microsoft President Brad Smith said OpenAI would remain independent and that the partnership would promote competition and innovation in the AI ​​industry, not monopoly.

"Microsoft only has an observer role and no voting rights on the OpenAI board. This is different from Google's acquisition of DeepMind. We are ready to cooperate with the CMA to provide the necessary information," he said.

According toForbesMicrosoft does not own any shares in OpenAI, but it does receive a portion of the profits from its operations. The company did not disclose its $10 billion investment to the government because OpenAI was initially a non-profit project. Under US law, investments or acquisitions of this type of organization do not require reporting, regardless of the size of the transaction.

Meanwhile, OpenAI asserted that the partnership with Microsoft helps the company pursue AI research that is safe and beneficial to users. Microsoft representatives have no authority to manage or control OpenAI's operations. Meanwhile, the CMA said it will review to assess the real balance of power between the two parties.

Although it has no decision-making power, Microsoft has the advantage of knowing more about OpenAI thanks to its board seat, and could, if it wanted to, block OpenAI from collaborating with competitors or cut off research funding, according to antitrust analyst Jennifer Rie.

Many experts also believe that there is a suspicious relationship between Microsoft and OpenAI. Microsoft CEO Satya Nadella acted as a middleman to negotiate the return of Sam Altman. He even offered to hire Altman and many other members of OpenAI.

“Large companies are using cooperation agreements to neutralize potential competitors in the field of AI. Antitrust authorities need to quickly investigate suspicious transactions and eliminate them if necessary,” said Max von Thun, director of the European Open Markets Institute.