In a recent announcement, the Competition and Markets Authority (CMA) has concluded its investigation into the partnership between Microsoft Corporation and OpenAI, Inc. The CMA has determined that the partnership does not qualify as a relevant merger situation, meaning it will not be referred to under section 22 of the Enterprise Act 2002.
The partnership, which began in 2019, involves a multi-year, multi-billion-dollar investment and collaboration across AI supercomputing and research. Microsoft has invested over $13 billion in OpenAI, making it the largest investor. Despite this significant investment, the CMA found that Microsoft does not have de facto control over OpenAI’s commercial policy. Instead, Microsoft exerts a high level of material influence but not control.
Key features of the partnership include Microsoft’s exclusive supply of compute infrastructure to OpenAI, an exclusive license to OpenAI’s intellectual property (with some exceptions), and mutual revenue-sharing provisions. The partnership also involves regular collaboration between senior decision-makers at both companies.
The CMA’s investigation focused on whether Microsoft’s control over OpenAI had increased from material influence to de facto control, particularly in light of recent developments such as the dismissal and re-appointment of OpenAI’s CEO, Sam Altman. However, the CMA concluded that there has been no change in control that would give rise to a relevant merger situation.
Joel Bamford, CMA director, addressed the length of the investigation, stating, “We are not blind to the length of time that this investigation has taken – particularly given the reforms we have launched recently which will considerably speed up and streamline the UK mergers process. We know pace matters to business confidence and investment. [But] the short time frame in which we concluded the other AI partnership cases has not been possible here. A combination of the degree of complexity, the changing nature of the arrangements and how they operate in practice, and the mutual desire for open dialogue between the CMA and the companies to ensure we understood these developments over time, has led to an exceptionally extended period of review.”
Overall, the CMA’s decision ensures that the partnership can continue without raising competition concerns in the UK. This outcome highlights the importance of maintaining healthy competition and consumer protection in the rapidly evolving AI sector.
