NIX Solutions: EU Probes Microsoft’s $13 B Investment in OpenAI

Microsoft’s $13 billion investment in OpenAI is set to be subject to further investigation by EU antitrust authorities. Officials will question competitors about whether the AI startup and Microsoft have entered into an exclusive partnership agreement.

European Officials’ Concerns

European Competition Commissioner Margrethe Vestager is expected to stop reviewing whether the two companies’ relationship complies with European merger and acquisition rules. Instead, she will be asking Microsoft’s competitors and customers about the exclusivity of Microsoft’s partnership with OpenAI and whether it will have a negative impact on competition. European officials are particularly interested in the fact that Microsoft Azure, under the terms of the agreement, is the only provider of cloud services to OpenAI.

NIX Solutions

These kinds of preliminary inquiries can sometimes lead to full-scale investigations by European competition authorities. In turn, these can lead to orders to take certain actions and the imposition of fines if abuses that interfere with fair competition are discovered. The European competition authority announced a possible review of the nature of Microsoft’s participation in OpenAI in January. The reason was the incident with the dismissal of the startup’s head, Sam Altman, which revealed deep ties between the two companies. The antimonopoly authorities of Great Britain and the United States have also shown interest in their relationship.

Implications of the Microsoft-OpenAI Partnership

The core of the Microsoft-OpenAI partnership is indeed the massive computing resources needed to power generative AI, notes NIX Solutions. Services like OpenAI ChatGPT and Google Gemini have provoked a sharp increase in demand for cloud services and computing power. OpenAI has become a major client of Microsoft’s cloud business. European competition authorities review transactions within strict time limits and often insist on legal remedies to address competition concerns. Transactions are blocked infrequently, and their participants are not punished if they do not mislead regulators or interfere with investigations.

We’ll keep you updated as this story develops.