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Microsoft’s OpenAI Venture Is Being Examined By The UK Competition Authority.

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Microsoft's OpenAI Venture Is Being Examined By The UK Competition Authority.

(CTN News) – The initial review of Microsoft’s substantial investment in OpenAI, the creator of ChatGPT, has been initiated by the competition watchdog in the U.K.

This makes it the first major regulatory body to raise concerns about potential competition issues arising from the tech giant’s association with one of the most significant artificial intelligence companies today.

In a statement released on Friday, the Competition and Markets Authority (CMA) stated that it is soliciting opinions from interested parties to determine whether Microsoft’s $10 billion investment in OpenAI has resulted in a “relevant merger situation.”

This situation occurs when two or more businesses cease or will cease to be distinct entities due to a transaction.

The CMA emphasized that the rapid expansion of AI is unparalleled in economic history. It also highlighted the importance of advancements in foundation models, which encompass general-purpose AI tools like ChatGPT.

These developments are considered a pivotal moment in the progress of this transformative technology.

The regulator has announced its intention to assess whether Microsoft’s collaboration with OpenAI has led to a situation where one company has gained control over another entity, either through material influence, de facto control, or holding more than 50% of the voting rights.

This review is part of the initial information-gathering process conducted by the CMA before initiating any phase 1 investigation. Sorcha O’Carroll, the senior director for mergers at the CMA, stated that the invitation to comment precedes the launch of a phase 1 investigation and is contingent upon receiving the necessary information from the partnership parties.

The CMA is likely to have closely observed the recent removal of OpenAI CEO Sam Altman from the company’s board, as Altman’s departure could have implications for the Microsoft-OpenAI partnership. Altman’s unexpected dismissal from OpenAI, a key player in the artificial intelligence industry, prompted Microsoft to hire him to lead a new advanced AI research team.

This move sparked a backlash from OpenAI employees, who demanded Altman’s reinstatement. Within a few days, Altman returned as CEO of OpenAI, and Microsoft secured a board seat as a non-voting member.

Microsoft’s representatives on the OpenAI board can attend meetings and access confidential information, but they cannot vote on director-related matters.

This differs from Google’s acquisition of DeepMind in 2014. Microsoft President Brad Smith emphasized the innovation and competition fostered by the Microsoft-OpenAI partnership while maintaining both companies’ independence.

The recent change is the addition of a non-voting observer from Microsoft to OpenAI’s Board. Microsoft is cooperating with the CMA and the CMA is reviewing the AI industry to assess risks and opportunities and establish principles for fair competition and consumer protection.

The European Union is expected to announce regulations for AI technology, focusing on the governance of foundation models and biometric identification tools.

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