Watchdog examines role of big tech in AI startups
The competition watchdog has stepped up its scrutiny of big tech involvement in artificial intelligence startups after asking for comment on three deals by Microsoft and Amazon.
The Competition and Markets Authority (CMA) has announced it is examining Microsoft’s investment in the French firm Mistral and its hiring of the British entrepreneur Mustafa Suleyman from his Inflection AI business. It is also scrutinising Amazon’s $4bn (£3.2bn) investment in the US artificial intelligence firm Anthropic.
The CMA has issued “invitations to comment” on the tie-ups, a procedural move that paves the way for a formal investigation, amid concerns that these partnerships are in effect giving major tech companies backdoor control over potential rivals and stifling competition.
The organisation has already asked for comments on Microsoft’s relationship with OpenAI, the developer of ChatGPT.
“We will assess, objectively and impartially, whether each of these three deals fall within UK merger rules and, if they do, whether they have any impact on competition in the UK,” said Joel Bamford, executive director of mergers at the CMA.
The move comes after a warning this month from the CMA’s chief executive, Sarah Cardell, that the organisation had “real concerns” about the AI market.
The CMA has singled out six tech companies at the heart of an “interconnected web” of AI partnerships. Those companies are Google, Microsoft, Mark Zuckerberg’s Meta, Amazon, Apple and Nvidia, the leading supplier of chips for training and operating AI systems.
The CMA’s next step with Microsoft and Amazon will be a “phase one” inquiry, where the watchdog will examine whether the partnerships fall under the UK merger regime and whether they raise competition concerns. If the CMA finds there are competition concerns and decides to proceed with a phase two inquiry, it could seek remedies from the companies involved.
In February Microsoft announced it was investing €15m (£13m) in Mistral, a Paris-based startup specialising in open-source AI models, which can be freely downloaded and adapted by users. Microsoft said the deal represented an opportunity for Mistral to “unlock new commercial opportunities” and “expand to global markets”.
The Mistral deal was followed weeks later by Microsoft announcing it had appointed Suleyman, co-founder of the UK artificial intelligence firm DeepMind, as the head of a new AI division. Several employees at Suleyman’s Inflection AI startup were also recruited to join the division. The tie-up included a $650m cash payment to Inflection and making the company’s AI models available on Microsoft’s Azure cloud service.
Amazon’s deal with Anthropic, developer of the Claude chatbot, involves the US startup using the tech company as its main cloud provider and using Amazon’s custom chips to build, train and deploy AI models.
Microsoft said it would provide the information the CMA needed for its inquiries. “We remain confident that common business practices such as the hiring of talent or making a fractional investment in an AI startup promote competition and are not the same as a merger,” the company said.
Amazon said the watchdog’s move was “unprecedented” and that the Anthropic deal was different from other tie-ups announced by major tech firms. In a pointed reference to Microsoft’s partnership with OpenAI, it said the deal “doesn’t give Amazon a board director or observer role, and continues to have Anthropic running its models on multiple cloud providers”.