Microsoft Denies Interest In OpenAI While UP Is Under Investigation For Antitrust

Microsoft Corp. is hoping that its straightforward defense of its $13 billion investment in OpenAI will be persuasive to antitrust officials as they investigate the software giant’s involvement in the field. As it has no traditional ownership stake in the popular startup, it cannot be considered in control of it. According to those with knowledge of the situation at the time, Microsoft chose an uncommon setup when negotiating a further $10 billion investment in OpenAI in January. It struck a deal to earn nearly half of OpenAI’s financial returns until the investment is repaid up to a pre-determined cap, according to one of the people, rather than purchasing a portion of the state-of-the-art artificial intelligence lab. OpenAI is a capped-for-profit firm based inside a non-profit organization, which is why the unconventional structure was created. Whether regulators detect a difference is unclear, though. The UK Competition and Markets Authority said on Friday that it was collecting data from interested parties in order to ascertain whether the two companies’ partnership poses a threat to competition in the country, which is home to Google’s Deepmind AI research facility. According to a person with knowledge of the situation, the US Federal Trade Commission is also investigating Microsoft’s stake in OpenAI and whether it would be illegal under antitrust laws. The person, who wished to remain anonymous while discussing a private situation, stated that the investigations are preliminary and that the agency has not yet launched a formal inquiry. Because the investment in OpenAI does not, according to US law, equate to control of the company, Microsoft did not register the transaction with the government, the source added. As a non-profit, OpenAI is exempt from US merger law’s reporting requirements regarding acquisitions of non-corporate businesses, regardless of their purchase price. The authorities in charge of the agency are evaluating the circumstances and the available choices. Brad Smith, the president of Microsoft, stated earlier on Friday that “the only thing that has changed is that Microsoft will now have a non-voting observer on OpenAI’s board.” He distinguished the company’s partnership with OpenAI as “very different” from Google’s complete takeover of DeepMind in the United Kingdom.