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Microsoft-OpenAI partnership faces antitrust probe in the UK

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UK's Competition & Markets Authority (CMA) investigates Microsoft & OpenAI partnership, raising concerns about market competition dynamics.

The Competition and Markets Authority (CMA) in the UK has initiated an investigation into the partnership between Microsoft and OpenAI, the developer of ChatGPT. This move comes amid concerns about the impact of the partnership on market competition dynamics.

The Competition and Markets Authority (CMA) is a non-ministerial department in the UK that promotes competitive markets and tackles unfair behavior. It is responsible for investigating mergers, conducting market studies and investigations, enforcing consumer protection legislation, and bringing criminal proceedings against individuals who commit cartel offenses.

OpenAI is an American artificial intelligence research organization consisting of the non-profit OpenAI, Inc. registered in Delaware, and its for-profit subsidiary OpenAI Global, LLC. The organization is dedicated to creating safe artificial general intelligence (AGI) that benefits all of humanity. 

Its work involves researching generative models and how to align them with human values. OpenAI also offers an API platform that provides access to its latest models and guides for safety best practices. The organization emphasizes the importance of safety and responsibility in the development of AI and is committed to bringing together people from a wide range of disciplines and backgrounds to contribute to the development of safe and beneficial AI.

According to the CMA, it wants to verify the essence of the partnership between the two firms, whether it is a merger, and the impact on the companies involved. Additionally, the CMA wants to ascertain the extent to which the collaboration will affect competition in the industry bearing in mind the $13 billion investment already made by Microsoft in OpenAI since 2019.

Furthermore, the investigation also addresses recent boardroom turmoil at OpenAI, including the firing and rehiring of CEO Sam Altman. The CMA acknowledges that these developments will be considered in determining the impact on a relevant merger situation.

In November 2023, Sam Altman, the former CEO of OpenAI, was dismissed from the company. The decision to remove Altman as CEO stemmed from a fundamental difference of opinion regarding safety between two factions involved in developing the world-altering software and considering its societal impact. However, after days of internal conflict at the AI startup, Altman reclaimed his position as CEO of OpenAI. The nonprofit group’s board agreed in principle for Altman to resume his role, with a new board replacing the previous one that had ousted him.

Sorcha O’Carroll, Senior Director for Mergers at the CMA, said that the invitation to comment is the initial step in the information-gathering process. She added that a phase 1 investigation would follow only after receiving the necessary information from the partnership parties.

In response to the investigation, Microsoft said that the collaboration is designed to preserve the independence of both companies and that the only change is Microsoft having a non-voting observer on OpenAI’s Board. Brad Smith, Vice Chair and President of Microsoft expressed their willingness to collaborate with the CMA and provide the necessary information.

Read also; UK regulator warns of unauthorized operation of Poloniex after $100M hack

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