UK CMA Clears Microsoft Partnership with OpenAI

The UK Competition and Markets Authority (CMA) announced today that it has closed its investigation of the Microsoft/OpenAI partnership after a lengthy 16-month investigation.

“Microsoft has acknowledged during the course of our investigation that it has held the ability to materially influence OpenAI’s policy since 2019,” the decision explains. “The focus of the current investigation was on whether Microsoft has increased its control over OpenAI from material influence to de facto control … The relationship between Microsoft and OpenAI is complex and has continued to evolve during the course of the CMA’s investigation. This decision takes into account recent developments in that relationship [and] the CMA has concluded that no relevant merger situation has been created, and that it does not have jurisdiction to review the Partnership in its current form.”

The CMA announced its investigation of Microsoft and OpenAI in December 2023 to determine whether the software giant was evading antitrust oversight of a de facto merger or acquisition. Over the course of the investigation, it issued multiple information requests to both companies and reviewed internal documentation about their relationship and how it has evolved.

Interestingly, the recent change to the partnership, by which OpenAI is no longer required to exclusively choose Microsoft Azure for new cloud capacity, appears to have triggered the UK CMA’s decision.

“Taking into account all of the available evidence, particularly in light of recent developments in the partnership which reduce OpenAI’s reliance on Microsoft for compute, the CMA does not believe that Microsoft currently controls OpenAI’s commercial policy, and instead exerts a high level of material influence over that policy. In other words there is no change of control giving rise to a relevant merger situation.”

CMA director Joel Bamford addressed the length of the investigation separately.

“We are not blind to the length of time that this investigation has taken – particularly given the reforms we have launched recently which will considerably speed up and streamline the UK mergers process,” he wrote on LinkedIn (which is owned by Microsoft). “We know pace matters to business confidence and investment. [But] the short time frame in which we concluded the other AI partnership cases has not been possible here. A combination of the degree of complexity, the changing nature of the arrangements and how they operate in practice, and the mutual desire for open dialogue between the CMA and the companies to ensure we understood these developments over time, has led to an exceptionally extended period of review.”