EU Focuses On Microsoft-OpenAI Deal In New Probe

The European Union is moving into the next phase of its investigation into the artificial intelligence (AI) industry and is focusing particularly on Microsoft multibillion-dollar investments into OpenAI, the bloc’s head of competition policy said on Friday.

The European Commission began reviewing Microsoft’s deal with OpenAI last year under EU merger rules, but dropped that probe in April after concluding Microsoft had not gained control of the AI firm, Margrethe Vestager, the EU’s competition commissioner and executive vice-president for competition policy, said in a speech.

“We have to make sure that partnerships like this do not become a disguise for one partner getting a controlling influence over the other,” she said, noting that Microsoft has invested some $13 billion (£10bn) into OpenAI.

Vestager said the Commission is now reviewing the industry under EU antitrust rules, which are designed to prevent dominant firms taking over new industries.

Microsoft and OpenAI

The Commission in March sent information requests to large AI companies including Microsoft, Google, Facebook and TikTok, has reviewed the responses and is “now sending a follow-up request for information on the agreement between Microsoft and OpenAI”, Vestager said.

She noted that Microsoft’s exclusivity arrangements with OpenAI are relevant to the inquiry.

The EU wants “to understand whether certain exclusivity clauses could have a negative effect on competitors,” she said.

Microsoft said that it stands “ready to respond to any additional questions the European Commission may have”.

“We support the Commission’s goal of keeping the AI industry competitive and innovative, and look forward to continuing our constructive dialogue,” OpenAI said in a statement, adding that it welcomes the investigations conclusions.

Vestager said the Commission is also concerned about consumer choices for foundation models, the technology that underpins generative AI systems.

‘Acqui-hires’

It is also examining a Google deal with Samsung to pre-install Gemini Nano, a mobile version of Google’s generative AI system, in Samsung’s S24 flagship smartphones.

“We are also sending requests for information to better understand the effects of Google’s arrangement with Samsung to pre-install its small model Gemini Nano on certain Samsung devices,” Vestager said.

In addition the bloc is looking at “acqui-hires”, where one company acquires another mainly for its employees, such as Microsoft’s $650m payoff to Inflection AI after gutting the company of founder Mustafa Suleyman and most of its other staff.

“We will make sure these practices don’t slip through our merger control rules if they basically lead to a concentration,” she said.