• The Competition and Markets Authority has issued a call for comment from those concerned about the relationship between OpenAI and Microsoft.
• Given how closely the pair work, the authority wants to determine whether that relationship constitutes a relevant merger.
• This is simply an information-gathering exercise and no accusations are being made.

As the likes of ChatGPT was gaining more traction, Microsoft announced that it was investing as much as $10 billion into the chatbot’s creator, OpenAI.

Since then, Microsoft has been on a steady path incorporating ChatGPT and other OpenAI products into its own products. Bing Chat, which is powered by ChatGPT, is even in Skype and Copilot has just started rolling out to Windows 11 users.

All of this collaboration has the Competition and Markets Authority (CMA) in the UK wondering whether OpenAI and Microsoft are a bit too close.

On Friday, the CMA opened its door to comments regarding whether the relationship between Microsoft and OpenAI has resulted in a relevant merger situation “and, if so, the impact that the merger could have on competition in the UK.”

Essentially, the CMA has noted the upsets that took place at OpenAI recently regarding the firing and subsequent rehiring of Sam Altman and wants to know whether Microsoft had any hand in that regard. The authority alleges that Microsoft had some involvement in regards to governance at OpenAI and this may suggest that Microsoft is more than a simple investor.

“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,” senior director for mergers at the CMA, Sorcha O’Carroll said in a statement.

The Authority says that there are three criteria that need to be meet for an arrangement to be considered a relevant merger situation.

“…first, either two or more enterprises must cease to be distinct, or there must be arrangements in progress or contemplation which, if carried into effect, will lead to enterprises ceasing to be distinct – this means that there must be an acquisition of control or change in the level of control held by at least one enterprise over another; (ii) second, at least one of the ‘turnover test’ (the UK turnover of the target exceeds £70 million) or the ‘share of supply test’ (the enterprises ceasing to be distinct both supply or acquire goods or services of any description and have a combined share of 25% or more of such acquisition or supply in the UK) set out in section 23 of the Act must be met; and (iii) third, either the merger must not yet have taken place or the date of the merger must be no more than four months before the day the reference is made, unless the merger took place without having been made public and without the CMA being informed of it (in which case the four-month period starts from the earlier of the time the merger was made public or the time the CMA was told about it).”

We’re sure Microsoft is just thrilled to be back in conversation with its pals at the CMA. After many months of back and forth as well as reworking its agreement, the CMA gave Microsoft the all-clear to purchase Activision Blizzard. Of course, Microsoft had to give up Activision Blizzard’s cloud gaming rights which were sold to Ubisoft.

We’re curious to see whether there is concern from UK businesses as to the relationship between OpenAI and Microsoft. There is no denying the two companies are working closely together but suggesting the pair are now just one company, might be a stretch of the imagination.

Lets see where the CMA goes with this matter in the new year.