Microsoft's investment in OpenAI faces regulatory scrutiny from the US and the UK

 Microsoft's investment in OpenAI faces regulatory scrutiny from the US and the UK

According to one source, Microsoft chose not to notify the agency about the acquisition since, in US legal terms, an investment in OpenAI does not correspond to ownership of the business.

After investing about $13 billion in OpenAI and incorporating its solutions into its main businesses, Microsoft has emerged as the clear leader in artificial intelligence (AI) among large tech firms, challenging Alphabet Inc. Google has had to work hard to get up to speed.

According to a source familiar with the situation, the U.S. Federal Trade Commission is looking into whether Microsoft Corp.'s investment in OpenAI Inc. may have violated antitrust rules.

The source, who requested anonymity in order to discuss a private subject, said that the probe is preliminary and that the agency has not yet launched an official investigation.

According to the individual, Microsoft did not notify the government about the purchase since its stake in OpenAI does not equate to ownership of the business under US law. OpenAI is a nonprofit organization, and regardless of their worth, purchases of non-corporate businesses are exempt from disclosure under US merger legislation. Officials from the agency are examining the circumstances and determining their options.

A representative for the FTC refused to comment. An inquiry for comments was not immediately answered by Microsoft.

In order to assess whether the partnership between the two businesses endangers competition in the UK—where Google's AI research facility DeepMind is located—the UK Competition and Markets Authority is also interviewing relevant parties. The government will accept feedback until January 3 before determining whether to launch a formal probe.

Microsoft is the clear leader in artificial intelligence (AI) among large tech firms, behind only Alphabet Inc.'s Google, having spent over $13 billion in OpenAI and incorporated its technologies into its core operations. have been compelled to.

The FTC is already looking at some of the issues brought up by AI technology, as Chairwoman Lina Khan has said in public. It has opened a consumer protection inquiry into OpenAI, citing concerns about the possibility that the company's well-known ChatGPAT conversational AI bot jeopardizes the privacy and reputation of its users.

The Microsoft-backed firm is the subject of the first government probe into a technology that has the ability to drastically alter people's lives in practically every way. Its potential for chaos has also become almost as compelling as its promise for change.

With transformational technologies like artificial intelligence, Khan said that enforcers "need to be alert quickly".

Khan is also keeping an eye on Microsoft's expansion. She is carrying on the government's protest against the corporation's $69 billion takeover of Activision Blizzard Inc., a video game business, which the agency is pursuing via an appeal.

The intimate relationship between the two firms was shown by Sam Altman's dismissal from OpenAI last month and his subsequent reappointment. Shortly after Altman was fired by OpenAI's board, Microsoft shares dropped 2.4%. At one point, Microsoft CEO Satya Nadella offered to recruit Altman and other departing OpenAI staff, directly assisting in negotiations and advocating for his return to the business. were.

The action taken by the UK begs the issue of whether antitrust authorities in the US and the EU will conduct comparable inquiries. A representative for the European Commission said that the agency was "following the control situation on OpenAI very closely" in response to a question about the CMA's decision.