US and British regulators are scrutinizing Microsoft’s multibillion-dollar investment in ChatGPT creator OpenAI for potential antitrust violations, according to reports Friday.
The Federal Trade Commission is examining the details of the partnership, Bloomberg reported, citing a source with knowledge of the matter.
The probe is said it be in its preliminary stages and the agency has yet to enact a formal investigation, the source noted.
Microsoft reportedly holds a 49% stake in OpenAI and didn’t submit the deal for FTC consideration because it does not have a controlling interest in the leading AI firm, the source added.
OpenAI is structured as a nonprofit and deals involving those entities are generally not examined under antitrust law.
Microsoft has committed more than $10 billion toward OpenAI’s development in the landmark partnership, which established the Big Tech giant as a frontrunner in the race to develop advanced AI.
The company recently gained a non-voting observer seat on OpenAI’s board in a governance shakeup that followed the shock firing and rehiring of its CEO Sam Altman. Microsoft CEO Satya Nadella reportedly played a crucial role in brokering the negotiations that led to Altman’s return.
The FTC’s probe emerged on the same day that the United Kingdom’s antitrust watchdog, the Competition and Markets Authority, said it was seeking input on the Microsoft-OpenAI relationship and its potential impact on competition.
“There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft,” the CMA said in a statement. “In light of these developments, the CMA is now issuing an [invitation to comment] to determine whether the Microsoft / OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition.”
The CMA will accept commentary on the tie-up through Jan. 3 before deciding whether to open a formal investigation.
Microsoft vice chairman Brad Smith pushed back on the reports, stating that the company has “forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies.
Smith also jabbed at one of OpenAI’s chief rivals – the Google-owned AI lab DeepMind.
“The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s Board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK,” Smith said. “We will work closely with the CMA to provide all the information it needs.”
Representatives for the FTC, Microsoft and OpenAI did not immediately return requests for comment.
The FTC probe follows the agency’s ongoing attempt to block Microsoft’s acquisition of the “Call of Duty” maker Activision-Blizzard. FTC Chair Lina Khan, a noted antitrust crusader, is still fighting that deal, even though it has already closed.
With Post wires