The whirlwind management drama at OpenAI ended last month with co-founder Sam Altman being reinstated within a week of his shock dismissal and a much bigger role for Microsoft, which ended up with a seat on the board for the first time since investing billions in the startup. Earlier this year. That new, more comfortable relationship is The focus of the new investigation that began today by the UK Competition and Markets Authority (CMA) on whether the two companies are now effectively in a “relevant merger position”.
The first part of the process is today’s announcement of the CMA’s interest, and a “call for comment”, which is open to both companies and any interested third parties to submit comments to the CMA for its consideration as it considers what, if any, steps it might take next.
Sorcha O’Carroll said: “The call for comment is the first part of the CMA’s information-gathering process and comes before any first-stage investigation is launched, which will only happen after the CMA receives the information it needs from the partnership parties.” The Senior Director of Integration at the Capital Markets Authority said in a statement:
“Relevant merger situation” is a specific regulatory term that is intended to take into account situations in which a company is not acquired or merged directly, but the relationship between the two effectively affects competition for the rest of the market.
The Capital Markets Authority indicates that “A A range of different types of transactions and arrangements may constitute a relevant merger situation, which could include minority ownership and arm’s length arrangements. Both, of course, are present in the relationship between Microsoft and OpenAI. Not only did Microsoft make a massive multi-billion dollar investment in OpenAI last year giving it just under 50% of the business. But the duo works very closely on developing a range of AI services, including a number of AI services Microsoft Azure cloud platform.
If AI is a moving target, it’s one that has prominently highlighted both Microsoft and OpenAI as two of its most powerful and accurate arrows. OpenAI has set the pace for building LLMs, and building services using those LLMs. Microsoft has supported this financially, but also operationally. Microsoft has played a very pivotal role in the last month of unrest, which appears to have been the latest move to pique the CMA’s interest.
“There have been a number of developments recently in OpenAI governance, some of which relate to Microsoft,” she noted today.
Although OpenAI has never fully revealed what led to the ouster of Altman and his co-founder Greg Brockman, Microsoft has wasted no time in offering the pair high-profile jobs at their company, along with jobs for any other OpenAI employees who wish to leave the startup in 2017. 2018. Objects. When Altman and Brockman were reinstated, it was a victory for them all: Microsoft ended up getting a seat on the board for the first time, yes, as a non-voting observer, but it remained at the table.
“The speed at which artificial intelligence (AI) is expanding across use cases and markets is unparalleled in economic history, while advances in robust fundamental models (FMs) mean that this is a pivotal moment in the development of this transformative technology,” CMA writes. Essentially, the regulator is concerned that in these early days, there are so few companies that it is difficult to compete in building and operating these basic models. “The partnership between Microsoft and OpenAI (including a multi-year, multi-billion-dollar investment, collaboration on technology development and provision of exclusive cloud services from Microsoft to OpenAI) represents a close and multifaceted relationship between two companies with significant activities in facilities managers and related markets,” she added.
There are a number of other criteria that must be met to be considered part of the relevant merger case as defined under the country’s Enterprise Law. If the CMA pursues this matter as a full investigation, these points will inevitably emerge. It will include questions about whether the two companies – in this case, in the field of artificial intelligence – are different enough; How much revenue is generated through their relationship (there is a revenue target of £70m); Whether it can be said that it represents more than 25% of the market for the product in question. These are all points that I imagine both parties would argue whether or not they exist.