The UK's competition regulator is reviewing Microsoft's links to OpenAI

The CMA wants to see if the partnership is a 'merger situation' that impacts competition.

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The UK is considering an investigation into Microsoft's partnership with OpenAI to decide if it has resulted in an "acquisition of control" that's subject to antitrust law, the Competition and Markets Authority (CMA) wrote today. The regulator said it's considering "recent developments," no doubt referring to the Sam Altman CEO ouster drama in which Microsoft played a large role.

"The CMA is now issuing an ITC to determine whether the Microsoft/OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition," it said in a news release. "The CMA will review whether the partnership has resulted in an acquisition of control — that is, where it results in one party having material influence, de facto control or more than 50% of the voting rights over another entity."

The regulator noted that the "close and multifaceted" partnership includes a multi-billion dollar investment by Microsoft, technology development cooperation and cloud services. It added that both firms have significant activities in financial and related markets, meaning their business dealings directly affect investors. It added that Microsoft was recently involved in developments related to OpenAI's governance.

When Sam Altman was fired by OpenAI's board, Microsoft stepped in to hire him, and a majority of OpenAI's staff threatened to bolt to Microsoft as well. OpenAI's board relented soon after and Altman returned as CEO. "Microsoft executives have since concluded that the current situation [with Altman back in charge] is the best possible outcome," according to a New Yorker expose on the drama.

In a statement, Microsoft told Engadget that its relationship with OpenAI keeps both companies independent. "Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies," said Microsoft's vice-chairman and president, Brand Smith, in a statement. "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. We will work closely with the CMA to provide all the information it needs.”

The CMA is now seeking views on whether the partnership creates a relevant merger situation and how it impacts competition in the UK. If an investigation is launched, it would be the second one involving Microsoft in the last year, following the company's Activision Blizzard acquisition. The UK's probe had material effects on that merger, as Microsoft agreed to sell Activision Blizzard game streaming rights to Ubisoft to satisfy the CMA.