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Microsoft Corp.<\/a>\u2019s $13 billion investment into\u00a0OpenAI Inc.<\/a>\u00a0is set to come under added scrutiny from European Union\u2019s antitrust watchdogs, who are poised to quiz rivals about the AI firm\u2019s exclusive use of Microsoft\u2019s cloud technology. \u00a0 \u00a0<\/p>\n Margrethe Vestager, the bloc\u2019s antitrust chief, announced Friday that the EU has\u00a0ruled out<\/a>\u00a0an investigation under the EU\u2019s merger rules into the deal. Instead, she announced that regulators are asking Microsoft\u2019s rivals about the US company\u2019s exclusivity clauses with OpenAI, and whether they might have a negative effect on competition.\u00a0<\/p>\n Bloomberg reported the news earlier.<\/p>\n As well as the focus on Microsoft, the EU will also circulate questions to the market on Google\u2019s\u00a0arrangement<\/a>\u00a0with Samsung<\/a> Electronics Co. to pre-install its small model \u201cGemini nano\u201d on certain devices.\u00a0<\/p>\n Vestager added in a speech that regulators are examining attempts by Big Tech to buy firms by way of mass hires. The EU preliminary step comes after the US Federal Trade Commission\u00a0launched<\/a>\u00a0investigations into Microsoft\u2019s hiring of Inflection staff.\u00a0<\/p>\n \u201cWe will make sure these practices don\u2019t slip through our merger control rules if they basically lead to a concentration,\u201d Vestager said.\u00a0<\/p>\n Under the terms of Microsoft\u2019s arrangement with OpenAI, Microsoft\u2019s Azure is the exclusive cloud provider for OpenAI \u2014 something that EU regulators want to examine more.\u00a0<\/p>\n Such preliminary questions from the EU can sometimes lead to formal investigations from the EU\u2019s antitrust regulators. These probes \u2014 in the long run \u2014 can result in orders to change behavior and potential fines if watchdogs unearth evidence of abusive practices hampering fair competition.\u00a0<\/p>\n \u201cWe appreciate the European Commission\u2019s thorough review and its conclusion that Microsoft\u2019s investment and partnership with OpenAI does not give Microsoft control over the company,\u201d Microsoft said. \u201cWe stand ready to respond to any additional questions the EC may have.\u201d<\/p>\n The EU\u2019s antitrust arm said in\u00a0January<\/a>\u00a0it was reviewing whether Microsoft\u2019s involvement with OpenAI should be vetted after a mutiny at the ChatGPT creator exposed deep ties between the two firms.\u00a0<\/p>\n The partnership first piqued the interest of regulators \u2014 including, as well as the EU, the UK\u2019s Competition and Markets Authority and the US Federal Trade Commission \u2014 since a scandal embroiled the AI firm over the firing and subsequent rehiring of Sam Altman as chief of OpenAI late last year.<\/p>\n Microsoft Chief Executive Officer Satya Nadella personally helped negotiate and advocate for his return to the company \u2014 at one point offering to hire Altman himself, along with other employees at OpenAI who wanted to leave.<\/p>\n OpenAI\u2019s board eventually agreed to reinstate Altman and the company then named a three-person interim board and added Microsoft as a non-voting observer.<\/p>\n That episode led regulators to examine the agreement. The UK watchdog said it would examine whether the balance of power between the two firms has fundamentally shifted to give one side more control or influence over the other, and the US Federal Trade Commission has made inquiries into the agreement.<\/p>\n At the core of the partnership between Microsoft and OpenAI is the massive amounts of computer power required to keep the worldwide boom in generative AI going. Running the systems behind tools such as ChatGPT and Google\u2019s Bard has sent demand for cloud services and processing capacity soaring. OpenAI, for example, has become a major customer of Microsoft\u2019s cloud business.<\/p>\n Under the EU\u2019s merger rules, officials vet deals under strict time frames and often push for remedies to allay specific competition concerns. While deals are in rare cases vetoed, firms generally don\u2019t face punishments unless they mislead regulators or stymie the process.<\/p>\n The EU\u2019s classic competition law is generally used to home in on potentially anti-competitive agreements between firms and also cases where powerful players abuse their dominance. If wrongdoing is found, fines can rise to 10% of a company\u2019s revenue.<\/p>\n Redmond, Washington-based Microsoft is\u00a0no stranger<\/a>\u00a0to EU antitrust scrutiny and in previous decades fought a long battle with regulators over abuses linked to the market dominance of Windows.\u00a0<\/p>\n This week the EU accused the company of abusing its market power by bundling the Teams video-conferencing app to its other business software.<\/p>\n<\/div>\n\nOpenAI<\/h3>\n
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