EU, MS OpenAI Investment Faces Antitrust Investigation Warning

English CMA also investigates MS-OpenAI partnership
EU "Will also monitor AI investments by other big tech"

OpenAI and Microsoft (MS), which are leading the global artificial intelligence (AI) boom, are facing the risk of an antitrust investigation by the European Union (EU).

[Image source=AP Yonhap News]

The European Commission of the EU stated on the 9th (local time) that "it is verifying whether MS's investment in OpenAI can be reviewed under the EU merger regulations."

Following the UK Competition and Markets Authority (CMA) announcing in December last year that it would launch an investigation into the cooperation between MS and OpenAI, the EU has also hinted at the possibility of an antitrust investigation. Currently, the EU is conducting a preliminary investigation, but if there is evidence of antitrust violations, a full investigation will be initiated.

The fact that major national competition authorities have begun investigating the possibility of antitrust violations by MS and OpenAI is interpreted as a response to the unusual governance structure of OpenAI revealed during the dismissal process of OpenAI CEO Sam Altman. MS has invested $13 billion in OpenAI since 2019, holding a 49% stake. Although the stake is less than 50%, so it did not undergo merger and acquisition (M&A) review by competition authorities, if MS is effectively exercising control, it should be subject to M&A review. EU competition authorities are expected to focus on whether the cooperation between the two companies constitutes a de facto merger and whether there is a possibility of antitrust violations.

Additionally, the EU plans to examine whether investments by other major big tech companies in AI firms violate antitrust laws. Since the release of ChatGPT in 2022 sparked an AI boom, investments by big tech in AI companies have surged. Google and Amazon have invested billions of dollars in AI companies such as Anthropic, and MS has also funded other AI companies like Inflection besides OpenAI.

The European Commission stated, "We are reviewing some contracts concluded between large digital market participants and generative AI developers and suppliers," adding, "We are investigating the impact of such cooperation on market dynamics."

In this regard, Margrethe Vestager, EU Commissioner for Competition, will visit Silicon Valley in the United States this week to meet with executives of major big tech companies. A meeting with OpenAI executives is also scheduled.

Meanwhile, MS responded to the possibility of an EU antitrust investigation by stating, "Since 2019, we have built a cooperative relationship with OpenAI that fosters more AI innovation and competition while maintaining the independence of both companies," adding, "The only recent change is that MS has obtained a non-voting observer seat on OpenAI's board." They argue that this is not a de facto merger. Earlier, Brad Smith, MS Vice Chairman and President, also stated last month that their relationship with OpenAI is "very different from an acquisition."