Microsoft Avoids UK Competition Scrutiny Over OpenAI Investment

On Wednesday, the U.K.'s Competition and Markets Authority (CMA) announced that Microsoft Corporation's $13 billion investment in OpenAI does not require a formal merger investigation.

Background: The CMA determined that Microsoft's financial stake in OpenAI does not equate to a merger. They found that there was no "change of control" that would give Microsoft "de facto control" over the AI startup, according to reports by the Financial Times.

This ruling comes after a lengthy examination of whether Microsoft's investment could potentially restrict competition within the AI sector.

Recent Developments: The CMA highlighted "recent developments" that have diminished OpenAI's reliance on Microsoft. A notable change is a new partnership between OpenAI and SoftBank Group, involving a $100 billion investment in AI infrastructure.

Joel Bamford, the CMA's executive director for mergers, advised that this decision should not be interpreted as a full endorsement of the partnership, especially concerning potential competition issues.

Significance of the Decision: This ruling is a positive outcome for Microsoft, allowing it to maintain its profitable collaboration with OpenAI without facing immediate regulatory challenges.

Moreover, reports suggest that SoftBank is currently negotiating to lead a new funding round for OpenAI, which aims to secure $40 billion. If successful, this could increase the valuation of the creator of ChatGPT to $300 billion, marking an unprecedented funding round for a private entity.

Stock Updates: Microsoft’s shares finished Wednesday at $401.02, a rise of 3.19%. However, the stock experienced a slight decline of 0.25% in after-hours trading. For the year, the stock has dropped by 4.20%, based on data from Benzinga Pro.

Microsoft, OpenAI, CMA