European Commission Examining Microsoft's Major Investment in OpenAI

Microsoft Corp has caught the attention of the European Commission (EC) due to its monumental investment in OpenAI, the renowned AI development company. The EC is evaluating the business connection between Microsoft and OpenAI, potentially marking the start of a more thorough regulatory review under European Union merger laws.

While not escalating to an official inquiry as of yet, the EC has expressed concerns and is actively 'checking' to ascertain whether Microsoft’s substantial financial commitment to OpenAI requires a formal review under the EU Merger Regulation.

Investigation Echoes from the United Kingdom

The European Commission's probe parallels similar actions in the United Kingdom. The British Competition and Markets Authority (CMA) is already questioning whether the $13 billion deal signifies Microsoft taking over control of OpenAI. This scrutiny was sparked by internal upheavals at OpenAI, where CEO Sam Altman experienced a brief dismissal before being reinstated, an event that prompted questions about Microsoft's influence over OpenAI.

Statements by Microsoft CEO Satya Nadella hinted at Microsoft's stern approach to its association with OpenAI, even suggesting that OpenAI's existence is deeply intertwined with Microsoft's support.

Broader Focus on AI Competitive Landscape

The European Commission’s interest in Microsoft and OpenAI’s dealings is part of a broader examination of virtual and generative AI markets. The EC has invited industry stakeholders to provide input on these sectors’ competitive states and the effects of various agreements between prominent digital corporations and AI entities.

Margrethe Vestager, overseeing the Commission's competition policy, underscored the importance of preserving competitive markets, particularly as businesses venture into innovative product development.

Concerns Over Big Tech's AI Dominance

Regulatory bodies are wary that a handful of tech giants could monopolize the growing AI industry. Aside from Microsoft and OpenAI, Amazon.com Inc has invested heavily in AI company Anthropic, while Alphabet Inc has backed the same venture with a significant capital infusion.

Despite Microsoft’s assertion of not seeking control over OpenAI, the tech giant’s investments are significant, around half of OpenAI's estimated value, highlighting its vested interest in OpenAI’s success and financial outcomes.

Microsoft, OpenAI, regulation