UK watchdog Competition and Markets Authority and Microsoft in OpenAI row

The competition watchdog is once again taking on Microsoft – this time over its partnership with the maker of ChatGP.

In a shock move, the Competition Markets Authority (CMA) said yesterday it is investigating the tech giant's multi-billion dollar relationship with OpenAI and whether it could be considered a merger.

The CMA is the first authority to question the relationship, but other regulators around the world are expected to follow the UK's lead.

Unconfirmed reports said last night that the US Federal Trade Commission is also investigating Microsoft's investment in the company.

It is the second time CMA head Sarah Cardell has challenged Microsoft in recent months following a blistering public row over its £53 billion takeover of Call Of Duty maker Activision Blizzard.

Cardell has been on a mission to tackle the power of big tech companies and their ability to suppress British businesses.

OpenAI was founded in 2015 and Microsoft – led by CEO Satya Nadella – has a 49 percent stake in the company after £10.3 billion of investment.

But the British regulator is questioning whether there is a collusive link and whether the two companies are different in who controls them. The watchdog said it had started an “information gathering process” ahead of an investigation that would look at the impact this would have on the UK artificial intelligence market.

OpenAI, meanwhile, continues to grapple with boardroom drama last month, which saw founder Sam Altmann ousted and reinstalled within days.

Altmann initially said he would defect to Microsoft, where he would head up their “advanced AI research” unit, but it was quickly agreed that he would return to OpenAI.

The saga has raised eyebrows at the watchdog, which is investigating whether Microsoft has 'de facto' control over OpenAI.

A spokesperson for the regulator said: 'The CMA is now determining whether the collaboration between Microsoft and OpenAI has resulted in a merger situation and, if so, what the potential impact on competition is.'

The spokesperson added that this was a pivotal moment for the much-hyped technology, whose expansion and impact is “unparalleled in economic history.” Microsoft President Brad Smith immediately fired back, denying that it had acquired OpenAI.

He said: “Since 2019, we have forged a partnership with OpenAI that has fostered greater AI innovation and competition, while maintaining the independence of both companies. “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 like Google's purchase of DeepMind in Britain.”

But Microsoft's support has been crucial to the company's growth – with their bosses appearing together at events. OpenAI is at the forefront of AI technology and has burst onto the scene with ChatGPT, a chatbot that can produce human-like content based on prompts.

“There is no OpenAI without Microsoft making a deep effort to collaborate with the company and its mission,” Microsoft CEO Nadella said earlier.

The CMA's latest move comes shortly after it resolved its row with Microsoft over video game maker Activision Blizzard. The CMA had initially blocked the deal in April over concerns about competition in the gaming market, angering Microsoft.

At the time, Smith labeled the move as “bad for Britain” and stated that “the European Union is a more attractive place to start a business.”

Cardell, meanwhile, slammed the tech company for its “corporate lobbying” tactics, but the CMA ultimately greenlighted the deal in October.

Microsoft, OpenAI and other interested parties have until January 3 to provide comments to the regulator.