EU Shifts Investigation of Microsoft’s Open AI Partnership

During a speech in Brussels today, European Commission executive vice president Margrethe Vestager revealed that her agency had shifted its investigation of the Microsoft/OpenAI partnership to see whether it harms competition.

The EC announced in January that it was investigating the partnership to determine whether it violated EU antitrust laws. The UK Competition and Markets Authority and U.S. Federal Trade Commission also launched similar investigations.

But by April, two separate reports revealed that the EC had concluded that Microsoft’s partnership did not amount to a takeover and was thus legal under EU law. Vestager  confirmed this.

“Under the EU Merger Regulation, the key question was whether Microsoft had acquired control on a lasting basis over OpenAI,” Vestager said today. “After a thorough review, we concluded that such was not the case.”

But rather than drop the matter, it has instead shifted its investigation.

“We sometimes have to remind AI market players that the competition rules also apply to them,” Ms. Vestager said today. “A major risk we see is big tech players leveraging their market power across different markets within their ecosystem … This could lead to practices like tying and bundling by dominant firms, blocking AI competitors from accessing essential resources, and preventing customers from switching.”

The EC sent formal information requests to Facebook, Google, Microsoft, and TikTok as part of an antitrust review, she noted. And after analyzing the replies, the EC has sent a follow-up request to Microsoft to help determine whether the OpenAI partnership has “certain exclusivity clauses could have a negative effect on competitors.”

The EC is also investigating other areas related to AI, including so-called “acqui-hires,” and here, too, Microsoft is getting some scrutiny.

“‘Acqui-hires’ is where one company acquires another mainly for its talent, as we have seen with Microsoft and Inflection,” Vestager added. “We will make sure these practices don’t slip through our merger control rules if they basically lead to a concentration.”