Microsoft's $13B Investment In OpenAI Under EU Scrutiny

Microsoft Corp. MSFT faces increased scrutiny from the European Union's antitrust regulators over its $13 billion investment in OpenAI Inc.

The EU is set to question rivals about the exclusivity of Microsoft's cloud technology for OpenAI's use, following concerns about potential negative effects on competition.

The EU's antitrust chief, Margrethe Vestager, is expected to announce that regulators will not launch an investigation under the EU's merger rules, but will instead gather more information from Microsoft's competitors and customers regarding the exclusivity clauses in the agreement, reported Bloomberg.

Under the terms of the partnership, Microsoft's Azure is the exclusive cloud provider for OpenAI. EU regulators are examining whether this exclusivity could harm competition.

These preliminary questions could lead to formal investigations and potential orders to change practices if anti-competitive behavior is found.

The EU's interest was piqued following a controversy involving the firing and rehiring of Sam Altman, OpenAI's CEO.

Also Read: OpenAI’s China Exit Sets Stage For Local AI Surge With Baidu, Alibaba As Potential Gainers

Microsoft CEO Satya Nadella played a significant role in Altman's return, which led regulators to scrutinize the partnership for any imbalance of power.

Similar inquiries have been made by the U.K.'s Competition and Markets Authority and the U.S. Federal Trade Commission.

The partnership between Microsoft and OpenAI centers on the massive computing power needed for generative AI technologies like ChatGPT.

This collaboration has significantly increased demand for cloud services, with OpenAI becoming a major customer of Microsoft's cloud business.

Recently, the EU accused Microsoft of abusing its market power by bundling the Teams video-conferencing app with its other business software.

MSFT Price Action: MSFT shares are trading higher by 0.24% at $453.94 at last check Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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