OpenAI relationship with Microsoft under scrutiny by competition watchdog

The recent drama at OpenAI which saw its CEO, Sam Altman, fired and rehired all in less than a week seems to have opened a Pandora’s box. Now, the UK competition watchdog is said to be investigating the relationship between OpenAI and Microsoft to determine whether it could be a merger disguised as an investment partnership.

To recap, Altman was let go after what many believe is a contrasting view on the future of the company. OpenAI was established as a non-profit but seems to have been pivoting to profit-driven operations with recent developments.

Seeing as Microsoft is the AI company’s biggest investor, it would be in its best interest to see the company become profitable.

Altman was reoffered his job after multiple employees threatened to quit but that was not before Microsoft stepped in with an offer to make him head of its advanced AI research team.

The events point to a deep relationship between Microsoft and OpenAI with Altman at the center of it all. And the question that is being asked is whether Microsoft is influencing the future of the AI startup in the background.

Specifically, The watchdog is questioning whether the partnership has resulted in an "acquisition of control", whether an effective merger has taken place, and if this could affect competition in the UK.

It has asked third parties for their comments on the tie-up and could launch a probe if it feels it is necessary.

"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," Sorcha O'Carroll, senior director for mergers at the CMA, said.

Microsoft notes that it has preserved the independence of both firms and its investment in OpenAI has only helped foster more AI innovation and competition. The only change is that “it will now have a non-voting observer on OpenAI's board.” So, although it will have access to confidential information about the running of the company, it has no power to influence any decision including hiring directors and daily operations.