Microsoft’s $13b OpenAI deal to avoid formal EU probe

Microsoft’s $13 billion investment into OpenAI is set to avoid a formal investigation by European Union merger watchdogs, calming fears that the relationship could be forced apart.

The European Commission has decided that the tie-up does not merit a formal probe because it falls short of a takeover and that Microsoft doesn’t control the direction of OpenAI, according to people familiar with the matter.

The EU’s antitrust arm said in January it was reviewing whether Microsoft’s involvement with OpenAI should be vetted after a mutiny at the ChatGPT creator exposed deep two firms.

While most deals examined under the EU’s merger regulation are eventually approved by Brussels watchdogs, officials are unafraid of wielding a veto if any competition concerns cannot be fixed within strict deadlines.

Microsoft declined to comment beyond pointing to an earlier statement that its OpenAI partnership has “fostered more AI innovation and competition, while preserving independence for both companies.”

A spokesperson from the commission said that to examine potential

ties

between

the competition concerns, the watchdog “first needs to conclude that there has been a change of control on a lasting basis” between the two firms.

At the core of the partnership between Microsoft and OpenAI is the massive amount of computer power required to keep the worldwide boom in generative AI going. Running the systems behind tools such as ChatGPT and Google’s Bard has sent demand for cloud services and processing capacity soaring. OpenAI, for example, has become a major customer of Microsoft’s cloud business.

In turn, all three of the world’s biggest cloud-computing providers — Microsoft, Amazon.com, and Alphabet’s Google — have become active investors in AI startups over recent years. AI outfit Anthropic has attracted a $4 billion investment from Amazon and a $2 billion investment from Google, who also forged a 2021 partnership with AI firm Cohere.

For its part, Microsoft has also been actively on the lookout for more partnerships with burgeoning AI firms, earlier this year announcing a $16 million partnership with French tech firm Mistral AI. (Bloomberg)