Microsoft, reportedly OpenAI’s biggest investor, said it had “preserved independence” for both firms. But the relationship has come under focus after recent upheaval at OpenAI.
Last month, OpenAI, which is best known as the creator of ChatGPT, was plunged into chaos when its boss Sam Altman was suddenly fired.
After Mr Altman’s sacking, Microsoft then offered him a job leading a new advanced AI research team, before he was reinstated at OpenAI following an appeal from employees.
It caused confusion about the future of the start-up, while Microsoft chief executive Satya Nadella had said previously that governance at the firm needed to change. Now, the Competition and Markets Authority is examining whether the US tech giant’s work with OpenAI could affect the AI market overall.
The watchdog is questioning whether the partnership has resulted in an “acquisition of control”, whether an effective merger has taken place and if this could affect competition in the UK.
It has asked third parties for their comments on the tie-up and could launch a probe if it feels it is necessary.
Sorcha O’Carroll, senior director for mergers at the CMA, said: “The invitation to comment is the first part of the CMA’s information gathering process and comes in advance of launching any phase 1 investigation, which would only happen once the CMA has received the information it needs from the partnership parties.”
In response to the announcement, Microsoft said that its partnership with OpenAI has “fostered more AI innovation and competition”.
Vice chair and president of Microsoft Brad Smith said that the only thing that has changed is that it “will now have a non-voting observer on OpenAI’s board”.
This means that it will have access to confidential information, but it will not be able to vote on matters like choosing directors or have any control over its operations.
On Friday, Microsoft also disputed reports that it owns any stake in OpenAI, saying that details of the agreement were confidential but it is entitled to a share of profits.
Mr. Smith added that the tech giant, which also came under scrutiny from regulators over its acquisition of Call of Duty maker Activision Blizzard, will work closely with the CMA to provide all the information that it needs.
An OpenAI spokesperson said: “Our partnership with Microsoft empowers us to pursue our research and develop safe and beneficial AI tools for everyone, while remaining independent and operating competitively.”
Fears that AI was going to overtake humans in the next year were unfounded, he said recently during an event in London.
“There’s absolutely no probability that you’re going to see this so called artificial general intelligence where computers are more powerful than people come in the next 12 months. It’s going to take years, if not many decades.”
Mr Altman was a co-founder of OpenAI and became the face of its ground-breaking chatbot ChatGPT after it launched last year.
He secured a significant funding boost to the tune of $13 Billion from Microsoft, which helped catapult the business.
In an interview with the Wall Street Journal (WSJ), one of the four board members who fired Mr Altman said that its goal was to “strengthen OpenAI and make it more able to achieve its mission.”
Helen Toner, an academic and now former board member, did not answer questions about her interactions with Mr Altman, but said that the move was due to a “lack of trust” in the executive.
There was reportedly a clash between the two after her work on an AI safety paper was published, which suggested that other tech companies had fast-tracked AI products in a bid to keep up with OpenAI.
She told the WSJ: “OpenAI is a very unusual organization, and the non-profit mission – to ensure [artificial general intelligence] benefits all of humanity – comes first.”
What is the Anti-Trust law; which has the Microsoft-OpenAI corroboration by their necks?
The Antitrust Division enforces federal antitrust and competition laws. These laws prohibit anticompetitive conduct and mergers that deprive American consumers, taxpayers, and workers of the benefits of competition.
The Antitrust Division also enforces other federal laws to fight illegal activities that arise from anticompetitive conduct, which includes offences that impact the integrity of an antitrust or related investigation.
Examples include: conspiracies to defraud the United States, mail and wire fraud, money laundering, kickbacks, false statements to Federal agents, perjury, and obstruction of justice, and bribery, among other crimes.
Why are the FTC and CMA behind the Microsoft-OpenAI partnership?
The U.K. Competition and Markets Authority (CMA) said on Friday it will review whether to launch a merger probe of Microsoft’s investment in OpenAI to see if it could hurt UK competition.
The U.S. Federal Trade Commission (FTC) is also examining the nature of Microsoft’s investment in OpenAI, and whether it may violate antitrust laws, Bloomberg News reported on Friday, citing a person familiar with the matter.
Microsoft has recently tangled with both the FTC and the CMA on its acquisition of videogame publisher Activision Blizzard over antitrust concerns.
The two companies and the FTC, which had declined to comment on the CMA’s move, did not immediately respond to requests for comment on the report.
“There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft,” the CMA said on Friday.
Microsoft owns 49% of the for-profit operating company, according to sources familiar with the matter. OpenAI has a non-profit parent which owns 2%, those sources said.
The speed at which the use of AI technology is growing is unrivalled in economic history, while advances in powerful foundation models, such as the one underpinning ChatGPT mean that this is a pivotal moment in the development of this transformative technology, the CMA said.
“The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK,” said Microsoft vice-chair and president Brad Smith in a statement, taking a swipe at its main rival.
He said the company will work closely with the CMA. OpenAI did not immediately respond to a request for comment on the CMA’s move.
The observer position means Microsoft’s representative can attend OpenAI’s board meetings and access confidential information, but it does not have voting rights on matters including electing or choosing directors.
