"Investment" or "Acquisition"? Microsoft and OpenAI caught the attention of the European Union's antitrust agency.

Just as the internal "power struggle" at OpenAI has settled down, the relationship between OpenAI and Microsoft has caught the attention of the European Union's antitrust regulators.

According to the latest reports from the media, Microsoft's $13 billion investment in OpenAI is now facing investigation by the European Union. The European Commission stated on Tuesday:

"It is reviewing whether Microsoft's investment in OpenAI complies with the EU's merger rules. If the necessary conditions are met, regulatory authorities may start a formal investigation to determine whether this arrangement is allowed."

The recent internal conflict at OpenAI has exposed the deep relationship between the two companies. Microsoft's $13 billion investment in OpenAI gives it a 49% stake in the company, but it does not have direct control over OpenAI.

However, in reality, as a traditional tech giant, Microsoft has quickly established itself as a leader in the field of artificial intelligence by deeply integrating the most advanced AI technology into almost all of its products through a dual binding of technology and ownership with the most promising and powerful AI startups.

Previously, regulatory authorities in the UK, the US, Germany, and other countries have launched investigations into the relationship between the two companies. Analysts have pointed out that if the investigations continue, it may even lead to the separation of the two companies or other structural or behavioral changes. Microsoft's pre-market stock price once fell by more than 0.5%, and is currently down by 0.33%.

Microsoft's Investment in OpenAI Under Global Regulatory Scrutiny

The relationship between Microsoft and OpenAI has attracted scrutiny from regulatory authorities around the world, with regulatory bodies in the UK, the US, Germany, and other countries raising questions.

The UK Competition and Markets Authority (CMA) stated that they are reviewing the relationship between OpenAI and its main investor, Microsoft, to determine whether this collaboration is, in fact, a "merger" in practice.

The German Federal Cartel Office previously pointed out that their cooperation is subject to merger control rules, but if Microsoft increases its influence over OpenAI in the future, a reevaluation will be conducted. In addition, the US Federal Trade Commission has questioned the relationship between the two companies. Some analysts believe that:

"If this investigation continues and antitrust authorities believe that the investment transaction has resulted in a lasting change in control or meets certain merger review criteria, it may even lead to the separation of the two companies or other structural or behavioral changes."

Furthermore, on Tuesday, the European Union's antitrust enforcement agency announced that it is seeking feedback on potential competition issues in the field of generative AI and virtual worlds. It pointed out that the EU's investment in the AI field is expected to exceed 7.2 billion euros in 2023, and the size of the European virtual world market is expected to exceed 11 billion euros in 2023. This exponential growth is likely to have a significant impact on the competitive landscape for businesses. The European director of the Institute for Open Market Research, Max von Thun, who focuses on strengthening antitrust laws, said that the AI field will trigger a wave of antitrust investigations:

Given the increasing concentration in the AI field, other regulatory investigations may follow. Antitrust agencies must act quickly to investigate these transactions, including, if necessary, undoing them to maintain competition and prevent this critical emerging technology from being monopolized.

The "Delicate Relationship" between Microsoft and OpenAI

Recently, the controversy surrounding the dismissal and subsequent rehiring of OpenAI CEO Altman has exposed the intricate relationship between the two companies.

After Altman was dismissed from the OpenAI board, Microsoft's stock price immediately dropped. Microsoft CEO Nadella personally intervened in the negotiations and actively pushed for Altman's return, even stating that Microsoft was willing to hire Altman.

To avoid antitrust scrutiny, Microsoft only holds a 49% stake in OpenAI and does not have direct control over the company. A Microsoft spokesperson clarified later on the 8th:

While the details of our agreement remain confidential, it must be noted that Microsoft does not have control over OpenAI and is only eligible to share in the profit distribution.

However, in reality, the delicate relationship between the two lies in the fact that, as a traditional tech giant, Microsoft has deeply integrated itself with the most promising and powerful AI startup through a mere $13 billion investment, binding the technology and ownership of the most advanced AI technology for the next five years. With little effort, Microsoft has taken the lead in the AI era and achieved dominance by incorporating AI technology into almost all of its products.