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Lanon Wee

UK Competition Regulator Examines Microsoft's OpenAI Investment

The U.K.'s competition watchdog has launched an initiatory investigation into Microsoft's substantial investment in OpenAI, the developer of ChatGPT. The regulator has requested further opinions to assess whether the transaction has generated a relevant merger scenario. Microsoft has retorted that their partnership with OpenAI is distinct from Google's acquisition of the British AI lab DeepMind in 2014. The U.K.'s competition watchdog has commenced an initial review into Microsoft's $10 billion investment in OpenAI, the creator of ChatGPT, making it the first major regulator to raise questions regarding the tech giant's ties to one of the most vital AI companies today.The Competition and Markets Authority declared in a statement on Friday that it is calling for views from parties involved to determine if Microsoft's investment has caused a "relevant merger situation," meaning two or more businesses have ceased or will cease to be distinct as a result of the transaction.The CMA commented that the growth of AI is "unparalleled in economic history" and that advances in so-called foundation models, like ChatGPT, are a "crucial moment in the evolution of this transformational technology."The regulator is examining whether Microsoft's partnership with OpenAI has led to the acquisition of power – in other words, a situation where one company exercises material influence, de facto control, or more than 50% of the voting rights over another entity."The invitation to comment marks the first step in the CMA's information gathering process and is issued prior to initiating any phase 1 investigation, which is only initiated once the CMA has the information it needs from the partnership parties," Sorcha O'Carroll, senior director for mergers at the CMA, stated in the statement.Microsoft President and Vice Chair Brad Smith commented on the CMA's statement, contrastingly noting Google's 2014 purchase of British AI lab DeepMind, by emphasizing that Microsoft's partnership with OpenAI is fundamentally different."Since 2019, we have formed an alliance with OpenAI that has sparked more AI development and competition, while preserving autonomy for both companies," Microsoft's Smith stated Friday."The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI's Board, which is not the same as an acquisition, like Google's acquisition of DeepMind in the U.K. Our team will cooperate closely with the CMA to supply all the information it requires."The CMA is also conducting a review of the AI industry to assess the risks and chances posed by foundation models and what principles need to be applied to the technology to avoid competition and customer protection violations. Additionally, the European Union is anticipated to agree on essential rules meant to regulate AI technology later Friday.

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