The European Union (EU) is closely scrutinizing Microsoft’s involvement with OpenAI, the developer of ChatGPT. The EU’s regulatory body, the European Commission, announced on Tuesday that it is deliberating whether to initiate a review of Microsoft’s investment in OpenAI based on its merger regulations.
To acquire a 49% stake in OpenAI’s for-profit division, Microsoft made a substantial $13 billion investment. OpenAI operates as a nonprofit organization, with a board overseeing its for-profit operations.
The Commission seems to be questioning whether Microsoft’s investment may be classified as a merger between the two entities.
No immediate comments were received from either Microsoft or OpenAI in response to the Commission’s inquiry. Both companies have emphasized that they function independently and that Microsoft does not exert control over OpenAI’s activities.
Microsoft has also reiterated that its relationship with OpenAI remains unchanged since it obtained a non-voting seat on the company’s board in November. This development occurred after Sam Altman was dismissed and subsequently reinstated as the CEO of the artificial intelligence startup.
In early trading on Tuesday, Microsoft shares experienced a 0.9% decrease, while the S&P 500 index declined by 0.5%.
EU Commission Examines Agreements Between Digital Market Players and AI Developers
The European Commission announced on Tuesday that it is currently investigating agreements made between major players in the digital market and generative AI developers and providers.
In addition to the collaboration between Microsoft and OpenAI, there has been a surge of partnerships between large technology companies and AI startups.
Last year, Amazon.com revealed its plan to invest up to $4 billion in Anthropic, a direct competitor to OpenAI. As part of this agreement, Amazon’s cloud customers would receive early access to Anthropic’s technology, while Anthropic would utilize Amazon Web Services as its primary cloud provider and chip supplier. Alphabet, the parent company of Google, has also made investments in Anthropic.
While Amazon’s shares remained relatively unchanged in early trading on Tuesday, Alphabet experienced a slight increase of 0.5%.
Within the EU, there is an ongoing debate regarding how to strike a balance between regulation and competition in the AI sector. Late last year, lawmakers within the bloc reached an agreement on the world’s first comprehensive legal framework for the sector. However, some venture-capital investors and politicians argue that this framework could potentially disadvantage European companies compared to their larger U.S.-based counterparts.
In a recent statement, the European Commission invited all interested stakeholders to share their experiences and provide feedback on the level of competition within virtual worlds and generative AI. They also requested insights on how competition law can be instrumental in ensuring the continued competitiveness of these emerging markets.