Britain’s competition authority, the Competition and Markets Authority (CMA), said Wednesday that Microsoft’s partnership with OpenAI doesn’t qualify for investigation under the merger provisions of the U.K.’s Enterprise Act 2002, the country’s anticompetitive practices law.
“Overall, taking into account all of the available evidence […] the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, and instead exerts a high level of material influence over that policy,” the CMA wrote in its decision. “In other words there is no change of control giving rise to a relevant merger situation.”
The CMA began investigating Microsoft’s partnership in December 2023. The tech giant is a top investor in OpenAI, having poured nearly $14 billion into the AI startup since 2019. Microsoft also packages many of OpenAI’s technologies in a managed offering called the Azure OpenAI Service, and it works closely with OpenAI to develop products like Microsoft’s Copilot chatbot and GitHub Copilot AI coding assistant.
The CMA was initially concerned that Microsoft acquired control over OpenAI’s commercial policy in 2019, and that this control increased following Microsoft’s role in securing OpenAI CEO Sam Altman’s re-appointment in November 2023. The CMA believed such control could be expected to result in a “substantial lessening” of competition in the U.K.
“The CMA was concerned that an increase in Microsoft’s control over OpenAI could give rise to potential competition concerns if Microsoft was able to restrict rivals’ access to OpenAI’s leading models in markets where access to foundational models is likely to be important and where Microsoft already holds strong market positions,” the agency wrote in a document. “The CMA was also concerned that the partnership could potentially impact competition in the emerging market for the supply of accelerated compute, given OpenAI’s potential to act as an important customer in this market.”
But, as the CMA noted in its decision Wednesday, recent developments have weakened — not strengthened — Microsoft’s influence over OpenAI. In January, Microsoft announced that it had renegotiated elements of its cloud computing agreement with OpenAI, moving to a model where Microsoft has the “first right of refusal” for certain OpenAI AI workloads and grants waivers to allow OpenAI to build additional computing capacity including a $500 billion U.S. data center deal with investor SoftBank.
