United States: The European Union (EU) may launch a merger investigation into Microsoft’s multibillion-dollar investment in ChatGPT developer OpenAI, according to officials.
Microsoft holds the largest minority stake in OpenAI Global LLC, a “capped profit” subsidiary under the management of OpenAI Inc., the non-profit organisation’s majority owner. Its investment, which comes in the form of cash and cloud computing credits, formally grants it no control over the business itself but does offer the chance to earn a return on capital of up to 100 times.
“Checking whether Microsoft’s investment in OpenAI might be reviewable under the EU merger regulation,” the European Commission stated.
The unique organisational structure of OpenAI came to light last year after its CEO, Mr. Sam Altman, was removed and then reinstated following a contentious dispute with the board of the nonprofit organisation. Microsoft became deeply involved in the dispute even though it had no legal influence over the resolution; among other things, it offered Altman and any other OpenAI employees jobs within its own company.
OpenAI has modified its own account of Microsoft’s involvement since the conflict. On the company’s website, a chart outlining its organisational structure from November referred to Microsoft as a “minority owner. Then, in a covert move, the chart was changed to reflect “minority economic interest.”
Prior to that announcement, the UK’s Competition and Markets Authority declared in December that it was collecting data regarding the specific nature of Microsoft and OpenAI’s partnership.
In order to examine their effects on market dynamics, the EU’s investigation into AI and virtual worlds will also “look into some of the agreements that have been concluded between large digital market players and generative AI developers and providers.”
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