Brussels is preparing for an antitrust investigation into Microsoft’s $13 billion investment in OpenAI, after the European Union decided not to proceed with a merger investigation into the most powerful alliance in the artificial intelligence industry.
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 committee also inquired into Google’s deal with Samsung to install a modified version of its Gemini AI system in the South Korean manufacturer’s smartphones, it announced 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 lasting basis. After a thorough investigation, we concluded that this was not the case. So we are closing 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 Microsoft-OpenAI deal “could have a negative impact on competitors”. The move is seen as a significant 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 review 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 ChatGPT maker after OpenAI’s board abruptly fired CEO Sam Altman in November 2023, only to be reinstated a few days later. He briefly joined Microsoft as head of a new AI research unit, underscoring the two companies’ close relationship.
Regulators in the U.S. and U.K. are also scrutinizing the alliance. Microsoft is OpenAI’s largest backer, though the investment of up to $13 billion, which was raised in January 2023, does not include conventional equity due to the startup’s unusual corporate structure. Microsoft holds a minority stake in OpenAI’s commercial subsidiary, which is owned by a nonprofit.
Antitrust investigations typically last years, compared to a much shorter period 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 denying competitors access to key technology, risk high fines and legal obligations to change their behavior.
Vestager said the EU was investigating practices that could effectively lead to one company controlling a larger share of the AI market. She pointed to a practice called “acqui-hires,” where one company buys another company primarily to get its talent. For example, Microsoft recently struck a deal to hire most of the top team from AI startup Inflection, in which it had previously invested. However, Inflection remains an independent company, which complicates any traditional merger investigation.
The EU’s competition chief said regulators are also investigating how big tech companies can prevent smaller AI models from reaching users.
“That’s why we’re 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 looking into “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 invited comments from customers and rivals.
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