According to EU officials on Tuesday, the European Union is investigating Microsoft’s collaboration with OpenAI and whether it could need a formal merger probe.
The announcement underscores the increasing scrutiny surrounding OpenAI, a prominent player in the artificial intelligence space, following a high-profile leadership crisis that culminated in the CEO of the company, Sam Altman, being abruptly fired and then reinstated, as well as Microsoft (MSFT) being granted a non-voting seat on the OpenAI board. The digital behemoth has also invested several billions of dollars on OpenAI.
The EU’s action comes after comparable declarations made by antitrust officials in the UK last month and a Bloomberg article indicating that the US Federal Trade Commission was carrying out an initial investigation.
Microsoft has stated in the past that it does not own any equity in OpenAI and that joining the board does not equate to a merger. For its part, OpenAI has stated that Microsoft does not have operational influence over the business thanks to the board position.
According to a statement released on Tuesday, the European Commission, which is the executive branch of the EU, “is checking whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation.”
The commission said that in addition to examining some of the contracts that other AI startups have with major tech giants, the investigation is a component of a larger effort to evaluate competition in the AI space.
Opponents claim that these agreements run the risk of “locking in” AI developers as clients since they sometimes contain promises to use just one or two cloud providers or investments made by Big Tech companies in the form of free cloud computing credits.
The European Commission further stated that it has requested “several large digital players” for information pertaining to the study and was seeking public input on the competitive environment in artificial intelligence and the virtual reality space.
The development of generative AI and virtual worlds is accelerating, according to EU antitrust official Margrethe Vestager. “It is crucial that these new markets maintain their competitiveness and that nothing prevents companies from expanding and offering customers the greatest and most cutting-edge products.”
In addition to investing in cloud credits, Microsoft has taken steps to incorporate OpenAI’s technologies into its own services.
In November, Microsoft CEO Satya Nadella told CNN contributor Kara Swisher on Swisher’s podcast, “There is no OpenAI without Microsoft leaning in, in a deep way, to partner with this company on their mission.” He swiftly added, “We love their mission; we even love their independence.” We don’t find it problematic.
The EU decision coincides with Vestager’s anticipated meeting this week in the US with many tech CEOs to talk about matters related to competition.c