Microsoft's Partnership With OpenAI Is Strictly Supervised By US And UK Antitrust Authorities

JAKARTA - Microsoft's partnership with ChatGPT maker OpenAI is being closely monitored by US and UK antitrust authorities. This was conveyed by British regulators and media reports on Friday, December 8, following a fight on the startup's board of directors which resulted in the sudden dismissal and return of the CEO, Sam Altman.

After a dramatic episode last month, Microsoft, a major OpenAI supporter, was given the position of a non-choice observer at the company by a new board of directors consisting of three early members. Microsoft representatives can attend OpenAI board meetings and access classified information, but cannot vote in terms of elections or dismissal of directors.

The company has not disclosed who from Microsoft will take the position of non-choice and what OpenAI's board of directors looks like in the final.

OpenAI's parent company is a non-profit, type of entity that rarely serves as a subject of antitrust surveillance. In 2019, they founded a subsidiary in the form of a business, with Microsoft owning 49% of shares. However, Microsoft's spokesperson denied this on Friday. They said the details of the agreement were confidential, that they had no "owning any share" of OpenAI, and deserved a share of profits.

The software company has committed to investing more than $10 billion into this startup, allowing it to take the lead in Alphabet's AI revenue race with Alphabet's Google.

"Regarding OpenAI's governance, there have recently been several developments, some of which involved Microsoft," the UK Competition and Market Authority said last Friday.

The CMA is reviewing whether to launch an investigation into Microsoft's investment to see if it could hurt competition in the UK.

The US Federal Trade Commission (FTC) is also researching whether the investment violates antitrust laws, as the Bloomberg News report reports. The FTC added that the investigation was still a preliminary and the agency had not yet opened an official investigation.

The FTC declined to comment. Microsoft president Brad Smith said in a statement that "the only thing that has changed is that Microsoft will now have non-choice observers on the OpenAI board."

"(It's) very different from acquisitions like DeepMind purchases by Google in the UK," he added, referring to deals by its main competitors in 2014.

"Other regulatory investigations can follow considering the increasing concentration in the field of artificial intelligence," said Max von Thun, European Director at the Open Markets Institute, a non-profit organization focused on strengthening antitrust laws.

"It is imperative for antitrust authorities to move quickly to investigate this deal, including disbandment if necessary, to maintain competition and prevent this important technology from becoming a monopoly," von Thun said.

European Union antitrust regulators say they have followed "with great care the control situation."

The UK CMA has invited interested parties such as Google to comment on the review until January 3, 2024.

"CMA needs to find evidence that recent conflict results from the Altman case have led to material changes in OpenAI governance and Microsoft's influence on its affairs," said Alex Haffner, competition legal expert and partner at Fladgate.

"Even if they don't pursue a full investigation, a preliminary investigation will provide better information for CMA's broader oversight of the rapidly growing artificial intelligence sector," he said.

Microsoft recently engaged in a dispute with the two FTC and CMA over the acquisition of 69 billion US dollars (Rp1,074.5 trillion) against video game maker "Call of Duty" Activision Blizzard over antitrust concerns.

The CMA has blocked Activision's previous deal in the year, but then changed its stance after Microsoft renewed its acquisition plans.