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CMA probes Microsoft-OpenAI partnership; Concerns over potential control

The CMA will be assessing potential material influence exerted by one party over another. 

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Edited By: Satyam Singh
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CMA probes Microsoft-OpenAI partnership; Concerns over potential control

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Microsoft president Brad Smith addressed concerns on Friday about the company's partnership with OpenAI, emphasizing that their role in the organization is as an observer on the AI company’s board, which is different from acquisition.\

Why CMA is investigating Microsoft-OpenAI partnership?

This clarification came after  the UK's Competition and Markets Authority (CMA) launched an investigation into whether Microsoft's partnership with OpenAI constitutes an "acquisition of control." The CMA will be assessing potential material influence exerted by one party over another. 

In a statement, Smith said, "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."

He further assured the CMA of Microsoft's commitment to collaborate closely and provide all necessary information in the review process.

The CMA's investigation is also examining whether the partnership has resulted in the merger situation in the organisation. The authority explained, "There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft."

Furthermore, it said, "In light of these developments, 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's worth noting that Microsoft has pledged significant investment in OpenAI, exceeding $10 billion, securing a 49% ownership stake in the company.

Why has OpenAI appointed Microsoft to its board?

Previously, OpenAI CEO Sam Altman announced that Microsoft would hold a non-voting observer position on OpenAI's board, granting access to confidential information without voting rights. This came after a brief period where the OpenAI board removed Altman, leading to Microsoft CEO Satya Nadella announcing his joining Microsoft's AI team. However, Altman was reinstated as OpenAI chief, and the board was restructured.

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