UK watchdog drops competition review of Microsoft’s OpenAI partnership | Microsoft

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*** watchdog drops competition review of

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’s OpenAI partnership |

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The ***’s competition watchdog will not hold a formal investigation into

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’s partnership with the startup behind the artificial intelligence chatbot ChatGPT, stating that while the $2.9tn (£2.3tn) tech company has “material influence” over OpenAI it does not control it.

The Competition and Markets Authority (CMA) said

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, OpenAI’s biggest financial backer with a $13bn investment, acquired material influence over the San Francisco-based business in 2019 but did not exercise de facto control over it – and therefore did not meet the threshold for an official inquiry.

The decision follows expressions of disquiet over the appointment of the former boss of

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***, Doug Gurr, as the CMA’s interim chair. The organisation’s chief executive, Sarah Cardell, has also said the CMA does not want to create a “chilling effect” on business confidence, amid pressure from the *** government on regulators to produce pro-growth proposals.

The CMA’s executive director for mergers, Joel Bamford, said: “We have found that there has not been a change of control by

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from material influence to de facto control over OpenAI. Because this change of control has not happened, the partnership in its current form does not qualify for review under the ***’s merger control regime.”

However, Bamford added that the decision should “not be read as the partnership being given a clean bill of health on competition concerns”.

The CMA started investigating the OpenAI relationship after the dramatic sacking and reinstatement of Sam Altman as OpenAI’s chief executive – over a hectic few days in November 2023,

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announced it had hired Altman, only for him to rejoin the startup.

The CMA highlighted a recent reduction in OpenAI’s reliance on

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for computer power – a key factor in operating an AI business – as an influence over its decision.

A

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spokesperson said the partnership with OpenAI and its continued evolution “promote competition, innovation, and responsible AI development … We welcome the CMA’s conclusion, after careful and prudent consideration of the commercial realities, to close its investigation.”

Last year, the CMA decided not to investigate

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’s investment in the AI firm Anthropic and further

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partnerships with the AI firms Mistral and Inflection.

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recently contributed to a funding round that raised $6.6bn for OpenAI and valued the business at $157bn. OpenAI is run by a non-profit board but has a for-profit subsidiary, in which

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is the biggest backer, with returns to investors and employees capped.

Despite concerns over Gurr’s appointment and the CMA’s efforts to avoid a “chilling effect” on the economy, the CMA did target big tech with investigations in January, the month that Gurr was appointed.

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is being investigated over its dominance in internet search and search advertising, while it is also conducting a separate inquiry on the impact of Apple and

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’s mobile platforms on consumers and businesses.

In January,

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said the CMA was making a “fundamental mistake” in its investigation into the cloud market, after the watchdog said the tech firm was making it harder for

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and

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to compete effectively for customers in cloud computing, the term for providing IT services such as data storage and computing power over the internet with a pay-as-you-go pricing structure.

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#watchdog #drops #competition #review #Microsofts #OpenAI #partnership #

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