Key Takeaways
The European Union said on Friday that it had determined that the relationship between Microsoft and OpenAI was not a merger but that it was monitoring alliances between big tech companies in artificial intelligence (AI) and their impact on competition. The European Commission said it had requested more information from Microsoft and OpenAI about the exclusive cloud agreement between the two companies and had sent similar requests to Alphabet Inc.’s Google and Samsung about their own relationships. Regulators in the EU, U.S. and U.K. have expressed concerns about the impact of major AI alliances on competition, leaving some investors worried that regulatory action could slow AI gains.
The European Union has ruled that Microsoft’s (MSFT) relationship with OpenAI doesn’t qualify as a merger, but the artificial intelligence (AI) superpower isn’t resting on its laurels just yet.
The European Commission said on Friday it was monitoring AI collaborations between big tech companies and their impact on competition, naming Microsoft, OpenAI, Google parent Alphabet (GOOGL), and Samsung.
EU demands information on Microsoft and OpenAI’s exclusive cloud contract
The EU said it was requesting information about Microsoft’s contract with OpenAI, focusing on the companies’ exclusivity. Microsoft Azure is OpenAI’s exclusive cloud provider as part of the companies’ multi-year, multi-billion-dollar deal.
European Union Competition Commissioner Margrethe Vestager confirmed on Friday that the European Commission has determined that Microsoft’s relationship with OpenAI does not qualify as an acquisition under EU merger control, adding that while the regulator is “closing this chapter,” “the story is not over yet.”
She said the EU would “continue to monitor relationships between all the key players in this rapidly changing sector, including Microsoft and OpenAI” and would “continue to enforce the rules in both antitrust and merger control.”
Google-Samsung partnership comes under scrutiny
Vestager said the EU has “a number of other preliminary antitrust investigations underway into various practices in AI-related markets,” including those of interest to Microsoft, OpenAI, Google and Samsung.
He explained that some of Google’s AI technology is integrated into Samsung devices through an agreement between the two companies, and the EU noted that this could limit competition among AI model developers in a market dominated by tech giants.
Could regulation slow big tech companies’ AI-driven growth?
The EU is not alone in considering the competitive impact of AI-focused alliances between major tech companies: Vestager echoes current investigations into AI collaborations by government regulators in the U.S. and the U.K.
The investigation has raised concerns that regulatory action could weaken the ties between Microsoft and OpenAI, which established itself as an early AI leader.
The regulations affecting Microsoft and OpenAI will likely have an impact on other AI partnerships involving big tech companies like Google and Amazon (AMZN), potentially raising questions about the impact of AI on profits, especially as big tech companies ramp up spending on AI.
Shares of Microsoft and Google parent Alphabet both fell more than 1% on Friday after the two companies gained about 20% and 31%, respectively, this year.
