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Brussels is preparing for an antitrust investigation into Microsoft’s $13 billion investment in OpenAI, after the EU decided not to investigate a merger of the most powerful alliance in the artificial intelligence sector.
The European Commission, the EU’s executive arm, began looking into an investigation into merger control rules in January but announced on Friday it would not do so due to a lack of evidence that Microsoft controls OpenAI.
However, the commission said it is now exploring the possibility of a traditional anti-monopoly investigation into whether the merger between the world’s most valuable listed company and the best-funded AI start-up harms competition in the fast-growing market.
The commission has also inquired into Google’s deal with Samsung to install a customized version of its Gemini AI system in the South Korean manufacturer’s smartphones, it said on Friday.
Margrethe Vestager, the bloc’s competition chief, said in a speech on Friday: “The key question was whether Microsoft had acquired control of OpenAI on a sustainable basis. After thorough investigation, we came to the conclusion that this was not the case. So we close this chapter, but the story is not over yet.”
She said the EU had sent a new set of questions to understand whether “certain exclusivity clauses” in the agreement between Microsoft and OpenAI “could have a negative impact on competitors”. The move is seen as an important step towards a formal antitrust investigation.
According to Vestager, the bloc had already asked questions to Microsoft and other technology companies in March to determine whether market concentration in AI could deter new companies from entering the market.
Microsoft said: “We appreciate the European Commission’s thorough investigation and its conclusion that Microsoft’s investment and partnership with OpenAI does not give Microsoft control over the company.”
Brussels began investigating Microsoft’s relationship with the ChatGPT maker after OpenAI’s board of directors abruptly fired CEO Sam Altman in November 2023, only to be rehired a few days later. He briefly joined Microsoft as head of a new AI research unit, highlighting the close relationship between the two companies.
Regulators in the US and UK are also investigating the alliance. Microsoft is OpenAI’s largest backer, although the investment of up to $13 billion, which was expanded in January 2023, does not include conventional equity due to the startup’s unusual corporate structure. Microsoft has a minority stake in OpenAI’s commercial subsidiary, which is owned by a nonprofit organization.
Antitrust investigations typically take years, compared with the much shorter time frame for merger reviews, and they focus on behavior that could undermine rivals. Companies that end up breaking the law—for example, by bundling products or blocking competitors from accessing key technology—face steep fines and legal obligations to change their behavior.
Vestager said the EU is investigating practices that could effectively result in one company controlling a larger share of the AI market. She pointed to a practice called “acqui-hires,” where one company buys another primarily to acquire its talent. For example, Microsoft recently struck a deal to hire most of the top team at AI startup Inflection, in which it had previously invested. However, Inflection remains an independent company, complicating any traditional merger review.
The EU’s competition chief said regulators are also looking into how big tech companies can prevent smaller AI models from reaching users.
“As a result, we are also sending requests for information to better understand the effects of the agreement between Google and Samsung to pre-install its small model ‘Gemini nano’ on certain Samsung devices,” Vestager said.
Jonathan Kanter, the US’s top antitrust enforcer, told the Financial Times earlier this month that he was also investigating “monopoly bottlenecks and the competitive landscape” in AI. Britain’s Competition and Markets Authority said in December that it had “decided to investigate the Microsoft-OpenAI deal” when it sought comment from customers and rivals.