UK Competition Watchdog Ends Probe of Microsoft-OpenAI Partnership

The UK’s competition watchdog, the Competition and Markets Authority (CMA), has concluded its investigation into the partnership between Microsoft and OpenAI, the creator of ChatGPT.

The CMA examined the nature of Microsoft’s relationship with OpenAI, focusing on potential changes in the wake of the leadership turmoil that saw OpenAI CEO Sam Altman briefly ousted and then reinstated. The watchdog determined that despite Microsoft’s considerable financial investment and exclusive access to some OpenAI AI products, the partnership remains unchanged and thus does not warrant review under UK merger regulations.

Digital rights advocacy group Foxglove criticized the decision, suggesting the CMA had been rendered ineffective. The probe, initiated in December 2023, followed concerns over Microsoft’s influence in the re-employment of Mr. Altman.

“In view of Microsoft’s potentially important role in securing Sam Altman’s re-appointment, the CMA believed there was a reasonable chance that an investigation would reveal that Microsoft had increased its control over OpenAI’s commercial policy,” the watchdog said.

However, the CMA found that while Microsoft exerts significant influence over OpenAI’s commercial policy, it does not fully control it.

“Because this change of control has not happened, the partnership in its current form does not qualify for review under the UK’s merger control regime,” stated Joel Bamford, CMA Executive Director for Mergers, in a LinkedIn post. He further clarified that the jurisdictional findings should not be interpreted as a complete endorsement of the partnership regarding competition issues.

Critics have linked the decision to shifts in the CMA’s operating environment tied to government directives promoting economic growth. The government removed CMA chair Marcus Bokkerink in January, replacing him with Doug Gurr, formerly of Amazon UK.

“The CMA has sat on this decision for over a year, yet within just a few weeks of a former Amazon boss being installed as chair, it has decided everything was absolutely fine all along, nothing to see here,” said Foxglove co-executive director Rosa Curling. She voiced concerns that Big Tech might be influencing regulators to limit competition.

When asked for comment, the CMA referred to Mr. Bamford’s LinkedIn post, in which he acknowledged the investigation’s duration and its impact on business confidence. The delays, he explained, were due to the evolving relationship between Microsoft and OpenAI.

In 2024, during Mr. Bokkerink’s tenure, the CMA issued similar findings on other AI partnerships involving companies such as Microsoft, Amazon, and Google. CMA chief executive Sarah Cardell expressed “real concerns” about an “interconnected web” of AI partnerships among tech giants. However, subsequent government instructions prioritized “pro-growth and pro-investment interventions.”

The UK also aligned with the US in not signing an AI agreement at a Paris summit in February. US Vice President JD Vance warned that excessive regulation could hinder the growth of the AI industry.

Chloe Birkett, a competition lawyer at Freeths, noted that the CMA’s approach may become less interventionist, though it will still scrutinize deals. Microsoft issued a statement welcoming the CMA’s conclusion, highlighting its commitment to fostering competition, innovation, and ethical AI development.

Additional reporting by Tom Singleton and Chris Vallance.