Microsoft's shareholding in OpenAI probed by US regulator

Federal Trade Commission examining whether investment violates competition law

Microsoft has a stake in OpenAI which owns the ChatGPT tool.

US regulator, the Federal Trade Commission, is examining the nature of Microsoft’s investment in OpenAI and whether it may violate competition laws, according to a person familiar with the matter.

The inquiries are preliminary and the agency has not opened a formal investigation, according to the person, who asked not to be named discussing a confidential matter.

Microsoft did not report the transaction to the agency because the investment in OpenAI does not amount to control of the company under US law, the source said. 

OpenAI is a non-profit entity and acquisitions of non-corporate entities are not reported under US merger law, regardless of value. Agency officials are analysing the situation and assessing what its options are.

The UK’s Competition and Markets Authority is also gathering information from stakeholders to determine whether the collaboration between the two firms threatens competition in the UK, home of Google’s AI research lab Deepmind. The agency is taking comments until early January, before making a decision on a formal investigation.

Microsoft has invested some $13bn (€12bn) in OpenAI and integrated its products into its core businesses, quickly becoming the undisputed leader of AI among big tech firms and forcing Google to scramble to catch up.

FTC chair Lina Khan has been vocal about concerns raised by AI technology and the agency is already scrutinising some aspects. It has opened a consumer protection probe into into OpenAI, questioning whether its popular ChatGPT conversational AI bot puts consumers’ reputations and data at risk.

That probe into the Microsoft-backed start-up marked the first official inquiry into a technology that has the potential to change almost every aspect of people’s lives and has become almost equally fascinating for its potential to run awry.

The move by the UK raises the question of whether competition regulators in other regions, namely the European Union and the US, will launch similar probes. 

• Bloomberg