CMA invites comments on Microsoft-OpenAI partnership

(Sharecast News) - The Competition and Markets Authority initiated a public consultation to gather opinions on the partnership between Microsoft and OpenAI on Friday. In its announcement, the CMA said it was seeking feedback from the involved parties and interested third parties to assess whether the partnership constituted a relevant merger situation, as well as the potential consequences it could have on competition in the UK.

"The speed at which artificial intelligence (AI) is scaling across use cases and markets is unrivalled in economic history, while advances in powerful foundation models (FMs) mean that this is a pivotal moment in the development of this transformative technology," the CMA said in its statement.

"The CMA's recent report into the rapidly evolving market for FMs noted both opportunities and risks for competition and consumer protection, which were captured in a set of proposed principles to guide the development of the market toward positive outcomes for people and businesses.

"Critical among these is the need for sustained competition between AI developers which will help to deliver innovation, growth and responsible practices across the sector, as well as the need for open and effective competition in the deployment of FMs across a range of downstream activities."

The CMA said it had closely monitored partnerships and strategic agreements that could potentially diminish competition in FM development and usage.

The partnership between Microsoft and OpenAI, characterised by substantial investments over multiple years, technology collaboration, and Microsoft's exclusive provision of cloud services to OpenAI, was what the regulator described as a multifaceted relationship between two prominent entities engaged in FMs and related markets.

It said recent developments in the governance of OpenAI, some of which involved Microsoft, had prompted it to issue the invitation to comment.

Last month, OpenAI chief executive Sam Altman was fired by the board and quickly hired by Microsoft, before being reinstated by OpenAI.

The CMA said its aim was to determine whether the Microsoft-OpenAI partnership, including the recent changes, had indeed led to a relevant merger situation and assess its potential impact on competition.

Its evaluation would consider whether the partnership results in an acquisition of control, where one party gained substantial influence, de facto control, or more than 50% of voting rights over the other entity.

The CMA would also examine whether there had been a change in the nature of control exercised by one entity over the other.

"The invitation to comment is the first part of the CMA's information gathering process and comes in advance of launching any phase one investigation, which would only happen once the CMA has received the information it needs from the partnership parties," said the CMA's senior director for mergers, Sorcha O'Carroll.

Reporting by Josh White for Sharecast.com.