EU Regulators Examining Microsoft’s OpenAI Investment

The European Union is looking into whether Microsoft’s financial backing of generative artificial intelligence (AI) leader OpenAI is subject to EU merger rules, regulators said on Tuesday, following a similar move from the UK competition authority in December.

“The European Commission is checking whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation,” the commission said in a statement.

The commission’s comments indicate it could begin a formal investigation into an alliance worth up to $13 billion (£10bn) that spurred a huge wave of investment into AI last year.

In addition to the UK, the US is also looking into the relationship between the two companies, which initiated an investment frenzy with the launch of OpenAI’s ChatGPT in November 2022.

Complex relationship

The UK’s Competition and Markets Authority (CMA) was the first competition regulator to announce it was investigating the two firms’ relationship following a dispute in November that saw OpenAI chief executive Sam Altman abruptly fired, before being hired by Microsoft hours later and finally rehired by OpenAI.

Microsoft pushed for Altman’s reinstatement during the affair and after the dust had settled it took a non-voting observer seat on the company’s board.

Microsoft in January of last year agreed to invest more than $10bn into OpenAI, in addition to previous investments, and is the AI firm’s exclusive cloud provider through its Azure service.

But Microsoft owns no conventional equity stake in the ChatGPT maker, and is only entitled to a capped share of its profits.

Emerging market

The European Commission said it was more generally “looking into some of the agreements that have been concluded between large digital market players and generative AI developers and providers” and “investigating the impact of these partnerships on market dynamics”.

“We are inviting businesses and experts to tell us about any competition issues that they may perceive in these industries, whilst also closely monitoring AI partnerships to ensure they do not unduly distort market dynamics,” said EU competition commissioner Margrethe Vestager.

Google and Amazon have over the past year made multibillion-dollar investments into private AI companies including Anthropic, while Microsoft also backs start-up Inflection and Nvidia has invested in multiple AI start-ups.

Vestager is travelling to Silicon Valley this week for meetings witih US technology executives and is scheduled to meet senior OpenAI officials during the trip.