UK watchdog drops probe into Microsoft-OpenAI partnership

The UK’s Competition and Markets Authority (CMA) has officially closed its investigation into Microsoft’s relationship with OpenAI, concluding that there has been no shift in Microsoft’s level of control over the AI company that would warrant regulatory intervention.

A little background

The CMA launched its probe following the high-profile dismissal and reinstatement of OpenAI’s CEO, Sam Altman, in November 2023.

The regulator sought to determine whether Microsoft’s influence had escalated from “material influence” (the ability to materially influence company policy) to “de facto control” (the ability to control company policy). The latter would have raised competition concerns for UK consumers and businesses.

CMA’s findings

After extensive engagement with both companies and a review of key operational documents, the CMA determined that while Microsoft had significant influence over OpenAI since 2019, there was no evidence that its control had increased to a level that would trigger regulatory scrutiny under UK merger laws.

Joel Bamford, Executive Director at the CMA announced the verdict on LinkedIn citing recent changes in OpenAI’s reliance on Microsoft’s for compute power as a key determinant.

“As recently as January 2025, Microsoft announced a change to its contractual rights in relation to the supply of compute capacity, which reduced OpenAI’s reliance on Microsoft,” Bamford wrote.

“Looking at the evidence in the round (including the recent changes), we have found that there has not been a change of control by Microsoft from material influence to de facto control over OpenAI.”

Regulatory implications and concerns

While the CMA’s decision means the Microsoft-OpenAI partnership is not subject to merger review, it does not necessarily imply that there are no competition concerns. The agency emphasized that its findings were based on the specific legal definitions of control under UK law rather than a broad assessment of competitive impact in the AI industry.

The CMA acknowledged that the length of the investigation was unusual, attributing the delay to the evolving nature of the Microsoft-OpenAI partnership and the need for careful scrutiny. The decision comes amidst broader regulatory reforms aimed at streamlining the UK’s merger review process.

Critics unconvinced

Critics are convinced the CMA’s decision is influenced by political pressures. The UK government has recently pushed regulators to focus on stimulating economic growth, a stance that has raised concerns about the independence of competition oversight.

Rosa Curling, co-executive director of the legal advocacy group Foxglove, questioned the timing of the decision, pointing to the recent leadership change at the CMA.

“The CMA has sat on this decision for over a year, yet within just a few weeks of a former Amazon boss being installed as chair, it has decided everything was absolutely fine all along, nothing to see here,” Curling told the BBC. “This is a bad sign that Big Tech has successfully convinced the prime minister to defang our competition regulator and let Big Tech gobble up the current generation of cutting-edge tech—just like they did the last one.”

In response, the CMA referred back to Bamford’s statement emphasizing the complexity of the case and the necessity of a thorough review process.

Looking ahead

The CMA has pledged to provide further clarity on its approach to AI partnerships and competition enforcement in the sector. It is set to update its guidelines in June, incorporating lessons from recent investigations, including those involving Microsoft, Amazon, and Google.