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Britain’s competition watchdog has launched an initial review of Microsoft’s mammoth investment in ChatGPT developer OpenAI, becoming the first major regulator to flag potential competition concerns over the tech giant’s relationship with one of today’s most important artificial intelligence companies.

The Competition and Markets Authority said in a statement on Friday that it is seeking the views of interested parties to clarify whether Microsoft’s $10 billion investment in OpenAI has resulted in a “relevant merger situation” involving two or more companies have given up or will no longer be separated as a result of a transaction.

The CMA said the speed at which AI is scaling is “unprecedented in economic history” and that advances in so-called baseline models that describe general-purpose AI tools such as ChatGPT represent a “pivotal moment in the development of this transformative technology.” represent .”

The regulator said it would examine whether Microsoft’s partnership with OpenAI resulted in an acquisition of control – in other words, a situation in which one company has material influence, de facto control or more than 50% of the voting rights over another company .

“The request for comment is the first part of the CMA’s information gathering process and comes before the launch of a Phase 1 investigation, which would only occur once the CMA has received the required information from the partner parties,” Sorcha O’Carroll said the senior director of mergers at the CMA in a statement.

Sam Altman’s departure – and return

The CMA may have paid close attention to the ouster of OpenAI CEO Sam Altman from the board of the company he co-founded last month.

Altman was fired by OpenAI in a surprise move from one of the companies at the center of the artificial intelligence boom of 2023.

The OpenAI board said at the time that it “no longer had confidence” in Altman’s ability to continue to lead OpenAI. Microsoft, which has a broad partnership with OpenAI, then hired Altman to lead a new advanced AI research team.

The move led to OpenAI employees outraged and demanding Altman’s return. Within days, Altman returned to OpenAI as CEO and Microsoft was given a seat on the board as a non-voting member.

Microsoft’s appointed board representative may attend OpenAI board meetings and access confidential information. However, they do not have the right to vote in matters such as the election or selection of directors.

Microsoft president and vice chairman Brad Smith, responding to the CMA’s statement, criticized Google’s 2014 acquisition of British AI lab DeepMind and said Microsoft’s partnership with OpenAI was different than that deal.

“Since 2019, we have partnered with OpenAI that has fostered greater AI innovation and competition while maintaining the independence of both companies,” Smith said in Friday’s statement.

“The only thing that has changed is that Microsoft will now have a non-voting observer on the OpenAI board, which is very different from an acquisition such as Google’s purchase of DeepMind in the UK. We will work closely with the CMA to provide all the information it needs.

Separately, the CMA is examining the AI ​​industry to assess what risks and opportunities arise from baseline models and what principles need to be applied to the technology to prevent competition and consumer protection breaches.

The European Union is also expected to agree on landmark rules to regulate AI technology later on Friday.

The regulation, which has been in the works for years, was the subject of tense negotiations between the EU institutions, with disagreements primarily over the regulation of foundation models and biometric identification tools.

Source : www.cnbc.com

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