EU's Antitrust Eagles Eye Microsoft-OpenAI's $10B Deal: What's Next?

In a recent development, the European Union (EU) has hinted that Microsoft Corporation MSFT could come under the EU merger rules scanner due to its financial support for the AI company OpenAI.

What Happened: Reuters reported that on Tuesday, the EU antitrust regulators indicated that Microsoft’s substantial investment in OpenAI might be subject to EU merger regulations.

Microsoft had pledged over $10 billion in OpenAI last year and secured a non-voting position on the AI company’s board. Despite this significant investment, Microsoft maintains that it does not hold any ownership stake in OpenAI.

The commission is also evaluating contracts between major digital market players and generative AI developers and providers to assess their impact on market dynamics.

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EU antitrust regulators are now calling for feedback until Mar. 11 on competition in virtual worlds and generative AI. They have also sent requests for information on these subjects to various large digital companies.

Why It Matters: Microsoft’s OpenAI partnership has been under regulatory scrutiny for some time. In December 2023, the U.K.’s Competition and Markets Authority (CMA) contemplated a merger probe into the competition issues that might arise from this partnership. This move by the EU adds another layer to the regulatory scrutiny faced by the tech giant.

OpenAI, led by CEO Sam Altman, has been a significant player in the AI landscape. In June 2023, Altman asserted the company’s dominance, stating that it was “hopeless” to compete with OpenAI on training foundation models. This latest regulatory development could potentially influence the competitive dynamics of the AI industry.

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