EU Reviewing Microsoft and OpenAI Partnership

Microsoft and OpenAI’s partnership is raising questions in Europe, particularly about how a collaboration at this scale will impact competition and the overall market dynamics.

Microsoft and OpenAI announced their continued partnership in January 2023, with a “multiyear, multibillion dollar investment to accelerate AI breakthroughs.” The partnership that kicked off in 2019 continues to focus on “AI supercomputing and research” to “independently commercialize the resulting advanced AI technologies.”

In addition to their formal partnership, Microsoft took a non-voting spot on OpenAI’s board following OpenAI’s upheaval in leadership in November 2023. In spite of all of this, Microsoft does not own any portion of OpenAI.

In January, a European Commission spokesperson said it is “checking whether Microsoft’s investment in OpenAI might be reviewable under the EU Merger Regulation.” It concluded that Microsoft’s partnership with OpenAI did not constitute an acquisition, and therefore does not violate any EU merger rules.

However, Microsoft and OpenAI are not out of the woods. Reportedly, the European Commission is still looking into whether the partnership has an impact on competition within EU markets, in particular if their practices and combined market power distorts or restricts the market.

There is currently no formal investigation. However, regulators are starting to compile data to decide what steps to take.

It is also reported that the partnership is under review by the UK’s Competition and Markets Authority and US Federal Trade Commission. Again, in both cases there is no formal investigation yet.

Microsoft and OpenAI are not the only big tech partnerships under scrutiny on both sides of the Atlantic. Regulators are also keeping an eye on the Google, Amazon, and Anthropic partnership.

Europe in particular is going toe-to-toe with big tech in an attempt to keep their power in check. With the introduction of the Digital Markets Act (DMA) in March, Europe has sought to ensure the digital market remains open and competitive, giving Europeans more choice.