MS's Bold Bet on OpenAI... EU Says "Not Under Investigation"

Microsoft Invested $13 Billion in OpenAI,
Securing Future Cloud Customers Amid AI Boom
Holding 49% Stake
EU Decides Not to Launch Investigation
But It's Too Early to Relax

Microsoft (MS) has invested $13 billion in OpenAI, the developer of ChatGPT, but the European Union (EU) regulatory authorities are reportedly not going to conduct a merger and acquisition (M&A) review. Although MS has cleared the significant hurdle of the EU, the possibility of regulatory investigations by major countries still remains.

On the 17th (local time), Bloomberg News cited anonymous sources reporting that “the EU Commission will not escalate the partnership in which MS invests $13 billion in OpenAI into a formal investigation to determine whether it hinders market competition.”

Since 2019, MS has focused on securing the potential benefits brought by the global AI boom through massive investments in partnership with OpenAI. For generative AI development to continue, cloud infrastructure capable of storing and managing vast amounts of data is essential. MS’s investment in OpenAI aims to secure long-term customers.

MS holds a 49% stake in OpenAI. In response, the EU Commission, which has been strengthening antitrust regulations on big tech companies, indicated in January that it would “examine whether MS’s investment in OpenAI could be reviewed under EU merger regulations,” suggesting the possibility of an investigation.

According to Bloomberg, the EU Commission concluded that the partnership between MS and OpenAI does not constitute an acquisition by MS nor does it infringe on OpenAI’s management rights. Despite the massive investment, MS does not hold a seat on OpenAI’s board. An EU Commission spokesperson stated, “More evidence of a sustained change in control between the two companies is needed to initiate a formal investigation.”

MS stated that “the partnership with OpenAI has promoted more AI innovation and competition while maintaining the independence of each company.”

Although MS has avoided the regulatory scrutiny of the EU, the problem is that numerous antitrust investigations by various authorities are piling up. First, the UK Competition and Markets Authority (CMA), the U.S. Department of Justice, and the Federal Trade Commission (FTC) are also closely examining whether the partnership between MS and OpenAI harms fair market competition.

Additionally, earlier this year, MS announced a $16 million investment in the French startup Mistral AI, prompting the EU Commission to initiate a preliminary investigation into potential antitrust violations and put the brakes on the deal.

Bloomberg predicted that “if investigations by various regulatory authorities proceed, the conclusion could be to halt investments by large companies in next-generation AI technologies.”