EU Considers Investigating Microsoft – OpenAI Partnership

• The European Commission is scrutinizing the OpenAI-Microsoft partnership to check for violations of merger regulations.
• The move from the EU comes on the heels of similar announcements by the US FTC and UK antitrust officials.

Microsoft’s $13 billion investment in OpenAI will likely face a formal investigation by competition regulators in the European Union. The European Commission is set to start an investigation on markets for generative AI and virtual worlds, with the aim of better understanding the implications of competition laws in these industries.

The EC has stated that it would investigate agreements between major generative AI developers, service providers, and major players in the digital markets, calling out the OpenAI – Microsoft collaboration in particular. Microsoft is the leading investor in OpenAI and has also integrated the AI startup’s technology into several of its products, including Windows OS, Office, and Bing, among others.

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Microsoft started investing in OpenAI in 2019, with billions more pouring into the AI startup in the following years in exchange for AI technologies like the immensely popular GPT LLM. However, recently, OpenAI has been facing increased scrutiny following the sudden sacking and reinstatement of its CEO, Sam Altman, in late 2023. Following this, Microsoft announced it would have a member on the OpenAI board with observer status.

The European Commission’s review has come soon on the heels of a similar announcement by the UK Competition and Markets Authority. The US Federal Trade Commission has also reportedly started an assessment into the collaboration. However, the non-voting status of Microsoft in the OpenAI structure is likely to go in its favor.

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