What just happened? Microsoft must really hate the UK’s Competition and Markets Authority (CMA). The watchdog was the final and most difficult regulator Microsoft had to appease in its $69 billion acquisition of Activision Blizzard. Now, the CMA could open an antitrust investigation into Microsoft’s relationship with OpenAI, likely prompted by the recent chaos at the ChatGPT company.
The CMA writes that it is providing an early opportunity for the parties and interested third parties to comment on whether the partnership between Microsoft and OpenAI, including recent developments involving CEO Sam Altman, has resulted in a relevant merger situation and the impact that such a merger could have on competition in the UK.
Microsoft is estimated to have invested as much as $13 billion into OpenAI and has integrated many of the company’s AI tools into its own products. The CMA cites this collaboration in technology development and exclusive provision of cloud services by Microsoft to OpenAI as a “close and multifaceted” partnership.
Those recent developments the CMA mentions refer to the turmoil that took place at OpenAI last month. It began when CEO Sam Altman was fired by the board who said they no longer had confidence in Altman’s ability to guide OpenAI and stay “consistently candid in his communications with the board.” Microsoft shares fell as much as 2.4% in the wake of the news.
This was followed by reports that the board could be replaced and Altman brought back, only for Microsoft CEO Satya Nadella to announce that Altman was joining the Redmond firm as the head of a new artificial intelligence research team.
The final part of the saga saw Altman return to OpenAI one day later, reportedly with Nadella’s help. He was reinstated as CEO under a new, three-person interim board with Microsoft as a nonvoting observer.
We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board of Bret Taylor (Chair), Larry Summers, and Adam D’Angelo.
We are collaborating to figure out the details. Thank you so much for your patience through this.
– OpenAI (@OpenAI) November 22, 2023
The CMA said it wants to review whether the partnership has resulted in an acquisition of control – where it results in one party having material influence, de facto control, or more than 50% of the voting rights – and if this could have an impact on competition.
Microsoft vice-chairman and president Brad Smith said in a statement that the company’s relationship with OpenAI ensures both firms remain independent.
“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 furnish all the information it needs,” Smith said.
The CMA was the last regulator to block Microsoft’s acquisition of Activision Blizzard earlier this year. The Windows maker was eventually forced to transfer cloud streaming rights for all current and new Activision Blizzard PC and console games released over the next 15 years to Ubisoft, in order to appease the watchdog.
