The European Union is taking a closer look at
Microsoft’s
relationship with ChatGPT developer OpenAI.
The EU’s executive arm, the European Commission, said Tuesday it is considering whether to launch a review of
Microsoft’s
investment in OpenAI under its merger rules.
Microsoft has invested $13 billion for a 49% stake in OpenAI’s for-profit arm. OpenAI is structured as a nonprofit company with a board which oversees its for-profit business.
The Commission appears to be questioning whether Microsoft’s investment results could be considered a merger between the two companies.
Both companies have said they function independently and that Microsoft doesn’t exert any control over OpenAI’s operations. A Microsoft spokesperson reiterated that in a statement Tuesday.
“Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies. The only thing that has changed recently is that Microsoft will now have a non-voting observer on OpenAI’s Board,” the spokesperson said.
Microsoft gained a non-voting seat on the company’s board in November, after Sam Altman was fired and swiftly reinstated as chief executive of the artificial-intelligence start-up.
OpenAI didn’t immediately respond to a request for comment.
Microsoft shares were down 0.9% in early trading on Tuesday, with the S&P 500 index down 0.5%.
The EU isn’t the only organization asking questions. The U.K.’s Competition and Markets Authority said in December it was inviting comments on whether the Microsoft-OpenAI partnership should be considered a de facto merger, in the first step toward a formal investigation of the arrangement.
The Commission also said Tuesday it was looking into some of the other agreements between large digital market players and generative AI developers and providers.
Apart from Microsoft and OpenAI, there have been a spree of tie-ups between large technology companies and AI startups.
Amazon.com
said last year that it would invest up to $4 billion in Anthropic, a rival to OpenAI. Part of the deal was that Amazon’s cloud customers would get early access to Anthropic’s technology, while Anthropic would use Amazon Web Services as its primary cloud provider and a chip provider. Google-parent
Alphabet
has also invested in Anthropic.
Amazon shares were broadly flat in early trading Tuesday while
Alphabet
was up 0.5%.
The EU is having a fierce internal debate over how to balance regulation and competition in the AI sector. Late last year, the bloc’s lawmakers struck a deal for the world’s first comprehensive legal framework for the sector, but some venture-capital investors and politicians have said the framework could put European companies at a disadvantage to their larger U.S.-based rivals.
“All interested stakeholders are invited to share their experience and provide feedback on the level of competition in the context of virtual worlds and generative AI, and their insights on how competition law can help ensure that these new markets remain competitive,” the Commission said in its statement Tuesday.
Write to Adam Clark at [email protected]
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