The European Commission announced on Tuesday its intention to assess whether Microsoft's substantial investment in OpenAI would fall within the European Union's merger laws. The tech giant has reportedly committed a staggering $13 billion (€11.8 billion) to the innovative startup responsible for ChatGPT, a chatbot that has transformed the industry and raised global concerns about the unchecked development of artificial intelligence (AI).
While Microsoft's investment signifies significant support for OpenAI, the EU is raising questions about the potential ramifications, including issues related to competition, control, and regulatory oversight. The European Commission, as the enforcer of competition rules, has the authority to scrutinize and, if necessary, intervene in business concentrations that may impact economic relations within the single market.
The EU's move is unrelated to the impending AI Act, the first comprehensive attempt to regulate AI technology globally, which is in its final stages of approval. The focus is on a competition policy approach to ascertain whether Microsoft's investment effectively amounts to an acquisition, providing the multinational corporation with substantial control over OpenAI.
If deemed subject to the EU Merger Regulation, Microsoft would need to formally notify the European Commission, initiating an investigation process. The examination could have retroactive implications, considering the ongoing nature of the investment, potentially resulting in corrective measures.
In addition to scrutinizing Microsoft's investment, the Commission will also review agreements made in recent years between large tech companies and developers of generative AI, the technology behind automated text, visual, and audio responses. Margrethe Vestager, the executive vice president overseeing competition policy, emphasized the need for competitive markets in virtual worlds and generative AI to encourage innovation and prevent anti-competitive practices.
Microsoft's investment in OpenAI began in 2019 with an initial $1 billion commitment, progressively increasing over time. The company's heightened focus on AI is evident in its integration of the technology into various services, such as the Bing search engine.
While OpenAI is technically a non-profit research organization, it operates a "capped-profit" subsidiary, allowing investors to potentially earn up to 100 times their initial investment, adding complexity to the scrutiny of this significant financial commitment.
