Back in December 2023, the UK’s Competition and Markets Authority (CMA) announced that it was investigating whether Microsoft’s partnership with OpenAI might result in a substantial lessening of competition in the UK. Today, the CMA has decided that Microsoft’s partnership with OpenAI does not qualify for a merger investigation.
According to the CMA’s investigation into the Microsoft-OpenAI partnership, no relevant merger situation has been created, so it does not have jurisdiction to review the partnership in its current form.
Microsoft is the largest investor in OpenAI, with about $13 billion invested to date. However, Microsoft does not have any voting rights or the right to appoint a director to OpenAI’s board. OpenAI's for-profit entity is entirely under the control of the OpenAI nonprofit.
The recent developments of the Microsoft-OpenAI partnership also influenced the CMA’s decision. Initially, Microsoft was the exclusive computing provider for OpenAI’s research and development. But earlier this year, both companies announced changes to their partnership. The agreement allows OpenAI to build additional computing capacity on its own as part of the Stargate project. However, Microsoft will have a right of first refusal (other than for OpenAI API workloads, which remain exclusive to Microsoft).
The CMA mentioned the following in its report on the decision of its merger inquiry:
“Overall, taking into account all of the available evidence, particularly in light of recent developments in the Partnership which reduce OpenAI’s reliance on Microsoft for compute, the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, and instead exerts a high level of material influence over that policy. In other words, there is no change of control giving rise to a relevant merger situation.”
This decision allows Microsoft and OpenAI to continue their partnership without further regulatory hurdles in the UK.
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