The UK is investigating the Microsoft and OpenAI partnership

The Competition and Markets Authority (CMA) is gathering information about Microsoft and OpenAI to decide whether their partnership threatens competition in the UK, which is home to Google’s DeepMind.

On Friday (December 8), the CMA said it was looking for comments from interested parties, giving Microsoft, OpenAI and others an opportunity to weigh in. That move could lead to a formal antitrust investigation by the British agency.

The fast-moving generative AI industry is increasingly attracting the attention of regulators worldwide. US tech giants Amazon, Google and Meta have entered into a flurry of deals with AI startups this year, aiming to quickly build and launch AI products.

M&A has been difficult given increased antitrust scrutiny, so these companies are finding ways to work with start-ups rather than buying them outright, Brendan Burke, an analyst at PitchBook, previously told Quartz.

OpenAI, the maker of ChatGPT, has propelled Microsoft to a leading role in the AI ​​space. The tech titan has products like the revamped Bing with AI and Copilot, an AI assistant, ahead of its peers. The company’s share has risen by 54% this year.

OpenAI’s recent mutiny has put a spotlight on the ties between OpenAI and Microsoft

The CMA’s investigation comes just weeks after OpenAI suffered a blip of uncertainty when CEO Sam Altman was fired, only to return within a matter of days. While it may be back to business as usual for the AI ​​startup, those recent events have put a spotlight on its relationship with Microsoft.

During Altman’s brief absence, Microsoft CEO Satya Nadella reassured him and OpenAI employees, many of whom had threatened to leave unless Altman is reinstalledthat they would have jobs at Microsoft.

Microsoft has invested at least $10 billion for a 49% interest in OpenAI, according to reports. “Microsoft owns no part of OpenAI and is only entitled to a share of profit distributions,” Frank Shaw, Microsoft’s chief communications officer, told Quartz in a statement.

Part of the agreement between Microsoft and OpenAI is that the former is the startup’s exclusive cloud service provider. OpenAI told CNBC that after its investment is repaid, Microsoft will receive a percentage of OpenAI’s profits up to the limit agreed upon by both parties, with the rest flowing to the non-profit body of OpenAI.

The dramatic turn of events at OpenAI also led to a new board, consisting of former Salesforce CEO Bret Taylor, former US Treasury Secretary Larry Sumners, and Quora CEO Adam D’Angelo. the only director to stay on. More members are expected to join. OpenAI’s new board also includes Microsoft as a non-voting observer.

After the CMA announcement, Microsoft president Brad Smith was quick to comment on the distinction between both partners—and to note how his company’s investment in OpenAI differs from Google’s purchase of UK-based DeepMind in 2014. While Microsoft invested tens of billions in OpenAI, Google bought DeepMind, reportedly for more than $500 million.

“Since 2019, we have forged a partnership with OpenAI that has fostered more AI innovation and competition, while maintaining independence for both companies,” Smith Friday night on X 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 like Google’s purchase of DeepMind in the UK. We will work closely with the CMA to provide all the information it needs.”