By Mauro Orru

U.K. antitrust officials said they wouldn't launch a formal investigation into Microsoft's ties with ChatGPT maker OpenAI, a victory for the tech giant in its bid to justify the partnership to regulators on both sides of the Atlantic.

The Competition and Markets Authority launched a review in December 2023 to determine whether Microsoft's investment in OpenAI and its partnership with the artificial-intelligence startup should be considered a de facto merger that might stifle competition in the country. Officials have now concluded this isn't the case and opted not to open a formal probe.

Joel Bamford, executive director of mergers at the CMA, said in a LinkedIn post that while Microsoft did acquire material influence over OpenAI in 2019, Microsoft never gained de facto control of the company. "Because this change of control has not happened, the partnership in its current form does not qualify for review under the U.K.'s merger control regime," Bamford said.

The decision, which comes as OpenAI prepares to become a for-profit corporation, marks another win for Microsoft after British regulators last year also cleared the company's hiring of former employees from Inflection AI and its partnership with that startup.

"Our OpenAI partnership and its continued evolution promote competition, innovation, and responsible AI development, and we welcome the CMA's conclusion," a Microsoft spokesperson said.

An OpenAI spokesperson said the startup also welcomed the decision. "OpenAI operates in a highly competitive and rapidly evolving industry, and we are focused on developing AI that is safe and beneficial for everyone," the spokesperson said.

Tech giants have splurged on AI startups since the debut of ChatGPT and a series of other AI offerings ushered in a spending bonanza, but regulators started closing in as those investments gained prominence.

Microsoft's partnership with the AI company dates back to 2019, but the tech giant entered the bigger picture as a major investor after OpenAI started gaining traction following the release of ChatGPT in late 2022. Microsoft has invested more than $13 billion in OpenAI since 2019, including its share of the startup's latest $6.6 billion fundraise.

OpenAI was founded in 2015 as a nonprofit to safely develop artificial intelligence, but it created a for-profit arm four years later to raise funding. The startup now plans to convert to a for-profit company.

Closer scrutiny of that partnership has already forced Microsoft to loosen the strings on some arrangements. Last year, the group relinquished its seat as an observer on OpenAI's board after Microsoft realized its position had unsettled some antitrust officials.

The European Union also scrutinized the partnership from a merger-control angle to determine whether Microsoft had acquired control on a lasting basis over OpenAI. The bloc's antitrust regulators concluded that wasn't the case, but said the EU would keep monitoring the relationship.

In the U.S., the Federal Trade Commission launched an inquiry into generative AI partnerships last year, including Google owner Alphabet, Amazon.com, Anthropic, Microsoft and OpenAI. The FTC ordered those five companies to provide information on their investments into AI startups.

News Corp, owner of Dow Jones Newswires and The Wall Street Journal, has a content-licensing partnership with OpenAI.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

March 05, 2025 08:14 ET (13:14 GMT)

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