The recent changes in the OpenAI management and Microsoft's role in the board reshuffle have prompted the UK antitrust regulator to review whether it should probe the partnership. However, Microsoft, which is OpenAI's biggest financial backer with 49 per cent stake, said it does not own any portion of the startup.
Competition and Markets Authority (CMA), the UK antitrust regulator, has said that it will decide on an official merger investigation after reviewing whether the partnership between Microsoft and OpenAI has resulted in an "acquisition of control". This is the second time that the CMA has reviewed competition issues in connection with Microsoft, according to Reuters.
"There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft," said the UK competition enforcer. "In light of these developments, the CMA is now issuing an ITC (Invitation to Comment) to determine whether the Microsoft/OpenAI partnership, including recent developments, has resulted in a relevant merger situation and, if so, the potential impact on competition."
The EU competition enforcer also said it's closely watching the developments. "While this transaction has not been formally notified, the (European) Commission has been following very closely the situation of control over OpenAI already before the recent events involving its management, including Microsoft's role on the OpenAI board and the investment agreements between Microsoft and OpenAI," the EU competition agency said in an email cited by Reuters.
The latest development comes after a slew of changes in the OpenAI board last month that saw the San Francisco AI startup's CEO Sam Altman getting fired and rehired with in a week. Altman reportedly tried to get Helen Toner, one of the board members, removed.
However, it backfired and the board fired Altman instead, followed by resignation of OpenAI President Greg Brockman. Two interim CEOs – the company's CTO Mira Murati and Twitch Co-founder Emmett Shear – were appointed in the following days.
The next day, Microsoft CEO Satya Nadella announced that Altman and Brockman will lead a new advanced AI research team at his company. However, with pressure from hundreds of OpenAI employees, the company's board was forced to reshuffle and Altman was back as its CEO.
A new initial board consisting of existing member and Quora CEO Adam D’Angelo; Bret Taylor, formerly co-CEO of Salesforce; and Larry Summers, former US Treasury Secretary, was set up. They were tasked with appointing a formal board where Microsoft will get a non-voting observer seat. This means that Microsoft can have one of its representatives attend OpenAI's board meetings and access confidential information but without any voting rights.
Does Microsoft own OpenAI?
Microsoft clarified on Friday that it does not own any part of OpenAI. Microsoft spokesman Frank Shaw said, "While details of our agreement remain confidential, it is important to note that Microsoft does not own any portion of OpenAI and is simply entitled to share of profit distributions."
Microsoft vice-chair and president Brad Smith stated, "The only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI's board, which is very different from an acquisition such as Google's purchase of DeepMind in the UK."
