The European Commission Investigates Microsoft’s Investment in OpenAI

The European Commission has launched a call for contributions on competition in virtual worlds and generative AI. On this latter point, the Brussels executive is particularly interested in Microsoft’s participation in OpenAI to see if it falls within the framework of the concentration regulation.

The saga of Sam Altman’s departure/reintegration at OpenAI at the end of 2023 continues to make waves. Today, it is the European Commission who, in the context of a call for contributions on competition in virtual worlds and generative AI, slips in a small sentence that is creating buzz. “The European Commission is checking if Microsoft’s investment in OpenAI can be subject to examination under the EU concentration regulation,” as stated in a press release.

For context, at the end of November, the board of OpenAI decided to remove startup founder Sam Altman from his position as CEO. This decision sparked intense negotiations on the part of Microsoft, which decided to invest $10 billion in the company developing ChatGPT. In the end, Sam Altman returned to his position and a new board of directors was appointed. Last week, Microsoft obtained an observer post without rights in the person of Dee Templeton.

Participation in OpenAI scrutinized by regulators

These tribulations and Microsoft’s 49% stake in OpenAI seem to have piqued the interest of competition regulators. Last month, the UK authority launched an investigation to determine if the two companies are in a “relevant merger situation.” The invitation to comment closed on January 3, but the review process is ongoing.

Furthermore, the German Federal Cartel Office (FCO) also examined the link between the two. Last fall, just a few weeks before the surprise ousting and quick return of Altman, the FCO concluded that the “cooperation” between OpenAI and Microsoft was not “currently” subject to merger control. However, it also warned at the time: “If Microsoft were to increase its influence on OpenAI in the future, it would need to be re-examined whether there is an obligation to notify under competition law.” Therefore, we will have to wait for the European Commission’s investigation to determine if the relationship between OpenAI and Microsoft falls under the concentration regulation. The European institution could then propose adjustments to this relationship.

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