A regulatory storm brews as Microsoft’s collaboration with OpenAI comes under the antitrust microscope in both the US and UK following recent upheavals in the startup’s leadership.
Nearing the resolution of a boardroom clash resulting in the abrupt exit and return of CEO Sam Altman, Microsoft, a substantial supporter of OpenAI, secured a non-voting observer role within the company’s board. This role allows access to confidential information but lacks voting rights on pivotal decisions.
“The recent governance shifts at OpenAI, involving Microsoft, have prompted attention,” highlighted the UK’s Competition and Markets Authority (CMA) in response to these developments.
Speculation looms over Microsoft’s exact representative in this non-voting capacity and the composition of OpenAI’s future board.
Contradictory narratives emerge regarding Microsoft’s stake in OpenAI. While a source indicated Microsoft held a 49% stake in a for-profit subsidiary, a Microsoft spokesperson refuted this, citing confidentiality and denying ownership while affirming entitlement to profits.
With Microsoft’s commitment of over $10 billion, it has surged ahead in the AI race, rivalling Alphabet’s Google for AI dominance.
The US Federal Trade Commission (FTC) has initiated preliminary examinations into potential antitrust violations concerning Microsoft’s investment, though no formal investigation has been launched as yet.
OpenAI’s parent being a non-profit entity traditionally evades antitrust scrutiny. However, with a for-profit arm and substantial investments, regulatory bodies are scrutinising the situation closely.
Anticipating the potential for market consolidation in the AI sector, Open Markets Institute’s Europe director emphasised the urgency for prompt antitrust inquiries to safeguard competition and prevent monopolisation of pivotal technology.
As the CMA mulls over possible regulatory action, inviting stakeholders like Google for input, the fallout from the Altman saga might trigger significant governance alterations that warrant closer scrutiny, according to competition law experts.
Despite prior clashes with regulators over acquisitions, such as the blocked Activision Blizzard deal, Microsoft navigates yet another regulatory storm that could significantly impact its collaborations and market influence.
