Microsoft and Amazon face UK competition review on AI deals

BRITAIN’S competition watchdog has launched a review of artificial intelligence (AI) investments made by Amazon and Microsoft amid fears they could be helping to entrench the dominance of the tech giants.

The Competition and Markets Authority (CMA) said it was seeking evidence on Amazon’s multibilliondollar investment in US AI start-up Anthropic, as well as Microsoft’s deals with Inflection and France’s Mistral.

The tech giants have been snapping up minority stakes in a growing number of AI companies, but stopping short of full takeovers.

The CMA said it would seek views on whether the deals were de facto mergers and could distort competition.

It said it had uncovered an “interconnected web of over 90 partnerships” in the sector, warning tech giants could use these deals to “shield themselves from competition”. The inquiry mirrors similar investigations in the US and Europe as regulators question the influence of big tech firms, valued at trillions of dollars, over smaller challengers.

Joel Bamford, executive director of mergers at the CMA, said: “Open, fair and effective competition in foundation model markets is critical to making sure the full benefits of this transformation are realised by people and businesses in the UK.”,

Amazon, which has invested $4bn (£3.2bn) in Anthropic, called the intervention “unprecedented”. A spokesman said it “doesn’t give Amazon a board director or observer role and continues to have Anthropic running its models on multiple cloud providers”.

Microsoft has taken a minority stake in Mistral, a French AI champion that has grown rapidly. It also hired the founding team of Inflection, a US AI business. The US tech giant, valued at $3trillion, has also invested $13bn in Openai, the business behind CHATGPT, but it remains a minority investor in the non-profit’s complex legal structure.

Its deal with Openai is subject to a separate CMA review, although it has yet to launch a formal investigation.

The AI inquiry will reheat tensions between Microsoft, Amazon and the CMA. The regulator previously investigated Microsoft’s takeover of the Call of Duty video game maker Activision and Amazon’s investment in Deliveroo. In both cases, the deals were ultimately allowed to pass.

‘Open, fair and effective competition is critical to making sure the full benefits are realised’