Saturday, February 24, 2024
Saturday, February 24, 2024
Home » CMA Seeks Views on Microsoft’s Partnership with OpenAI

CMA Seeks Views on Microsoft’s Partnership with OpenAI

by Timothy Johnston
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Invitation to comment launched by the CMA on the partnership between Microsoft and OpenAI.

The Competition and Markets Authority (CMA) is today providing an early opportunity for the parties and interested third parties to comment on whether the partnership between Microsoft and OpenAI, including recent developments, has resulted in a relevant merger situation and, if so, the impact that the merger could have on competition in the UK.

The Invitation to Comment (ITC) is the first part of the CMA’s information gathering process and comes in advance of any launch of a formal phase 1 investigation.

The speed at which artificial intelligence (AI) is scaling across use cases and markets is unrivalled in economic history, while advances in powerful foundation models (FMs) mean that this is a pivotal moment in the development of this transformative technology. The CMA’s recent report into the rapidly evolving market for FMs noted both opportunities and risks for competition and consumer protection, which were captured in a set of proposed principles to guide the development of the market toward positive outcomes for people and businesses. Critical among these is the need for sustained competition between AI developers which will help to deliver innovation, growth and responsible practices across the sector, as well as the need for open and effective competition in the deployment of FMs across a range of downstream activities.

As part of its ongoing work in this area, the CMA has been closely monitoring the impact of partnerships and strategic agreements which could result in a weakening of competition in the development or use of FMs. The partnership between Microsoft and OpenAI (including a multi-year, multi-billion dollar investment, collaboration in technology development and exclusive provision of cloud services by Microsoft to OpenAI) represents a close, multi-faceted relationship between two firms with significant activities in FMs and related markets.

There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft. In light of these developments, the CMA is now issuing an ITC to determine whether the Microsoft / OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition.

The CMA will review whether the partnership has resulted in an acquisition of control – that is, where it results in one party having material influence, de facto control or more than 50% of the voting rights over another entity – or change in the nature of control by one entity over another.

Sorcha O’Carroll, Senior Director for Mergers at the CMA said:

The invitation to comment is the first part of the CMA’s information gathering process and comes in advance of launching any phase 1 investigation, which would only happen once the CMA has received the information it needs from the partnership parties.

The CMA is now inviting views on whether the partnership between Microsoft and OpenAI, including recent developments, results in the creation of a relevant merger situation and, if so, the impact of the partnership on competition in the UK.

More information on the CMA’s investigation can be found on the Microsoft / OpenAI partnership merger inquiry case page.

Alongside this review, the CMA is continuing with its wider work looking at the implications of FMs for competition and consumer protection and will be publishing an update on that work in March 2024, including on how FM developers are accessing key inputs (such as expertise, data and computing power) through investments, mergers, acquisitions and partnerships. At the same time, the CMA continues to progress its cloud infrastructure market investigation to consider whether there are competition concerns and, if so, what interventions can improve the supply of these important services for UK customers.

Source : Gov.Uk

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