Several weeks ago, the British competition authority concluded its investigation into Microsoft’s potential control over OpenAI, determining that Microsoft does not exert decisive influence over the company. The Competition and Markets Authority (CMA) found no dominant influence as defined under merger control regulations, leading to the cessation of their inquiry.
Since 2019, Microsoft has invested over $13 billion in OpenAI, aiming to promote innovation and responsible AI development. While these investments appear benign, they are typically accompanied by strategic interests.
Concerns regarding Microsoft’s potential competitive influence prompted the CMA’s investigation. The authority concluded that Microsoft’s partnership with OpenAI does not meet the criteria for merger control, as Microsoft lacks de facto control over OpenAI. If other competition authorities adopt similar stances, this could set a precedent allowing investors to form analogous partnerships without adhering to stringent antitrust regulations, thereby bypassing ex-ante merger assessments.
However, this decision should not be interpreted as a carte blanche. It likely pertains to this specific case, and future engagements must still be evaluated to determine if they meet the criteria for applicable merger control and avoid antitrust violations.
These considerations are crucial when investing in AI startups. We offer assistance with such strategic decisions in AI markets.
