Microsoft's OpenAI Investment Could Face EU Probe -- 2nd Update

By Mauro Orru

The European Union is considering whether to launch a review of Microsoft's investment in ChatGPT maker OpenAI under the bloc's merger regulations, a month after the U.K. said it was also weighing whether the tech partnership could have an impact on competition.

The European Commission, the EU's executive arm, made the disclosure on Tuesday as it sought input from interested parties on the level of competition in virtual worlds and generative artificial intelligence, and feedback on what competition law can do to keep these new markets competitive.

"The European Commission is checking whether Microsoft's investment in OpenAI might be reviewable under the EU Merger Regulation," the commission said.

Last month, Britain's Competition and Markets Authority said it was seeking feedback on whether the Microsoft-OpenAI partnership should be considered a de facto merger, in a preliminary step that could lead to a formal investigation.

The two regulatory moves in Europe come in the wake of the abrupt firing and reinstatement of OpenAI Chief Executive Sam Altman late last year, along with the formation of a new board. In the boardroom shake-up, Microsoft gained a non-voting observer position.

Microsoft said that, since 2019, its partnership with OpenAI had fostered more AI innovation and competition, while preserving independence for both companies. "The only thing that has changed recently is that Microsoft will now have a non-voting observer on OpenAI's board," a Microsoft spokesperson said.

OpenAI didn't respond to a request for comment.

OpenAI started gaining traction in late 2022 after the release of its ChatGPT chatbot. Microsoft entered the picture as a major partner for OpenAI, agreeing to invest $13 billion in the company in exchange for what is essentially a 49% stake in the earnings of its for-profit arm.

The EU is asking for feedback from interested parties by March 11.

Write to Mauro Orru at [e-mail]

(END) Dow Jones Newswires

January 09, 2024 12:15 ET (17:15 GMT)

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