Credit By: The Wall Street Journal
The UK’s competition watchdog, the Competition and Markets Authority (CMA) has investigated Microsoft and OpenAI’s cooperation to see whether or not it resembles a merger. To ascertain if the partnership, including recent events, has resulted in a “relevant merger situation” and what effect it might have on competition in the UK, the CMA is requesting feedback from the parties involved and interested third parties.
Microsoft’s November Announcement Triggers Probe
The probe was sparked by Microsoft’s late-November disclosure that one of the company’s representatives had been added as an observer to OpenAI’s board. This action was taken soon after OpenAI’s internal strife, including the board dismissing CEO Sam Altman and hiring him back a few days after worker and investor outcry.
Criteria for “Relevant Merger Situation”
The CMA explained that acquiring a minority shareholding or specific business agreements, including outsourcing contracts, could qualify as criteria for a “relevant merger situation.” The watchdog has highlighted the significance of continued competition in the industry and voiced concerns about the prospects and hazards for consumer protection and competition resulting from the rapid development of artificial intelligence (AI).
Microsoft’s Reaction to the Investigation
In response to the probe, Brad Smith, President of Microsoft, said that the company’s 2019 cooperation with OpenAI has encouraged AI innovation and competition while preserving each company’s independence. He emphasized that to differentiate the current development from acquisition, Microsoft only has a non-voting observer position on OpenAI’s board.
Commitment to Collaboration and Information Sharing
Microsoft has stated that it will work with the CMA and supply all required information. Remarkably, the CMA first raised concerns about competition and temporarily blocked Microsoft’s $69 billion acquisition of Activision Blizzard, a significant video game company. However, in October, the deal was authorized.
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