(Bloomberg) -- The US Federal Trade Commission is examining the nature of Microsoft Corp.’s investment in OpenAI Inc. and whether it may violate antitrust laws, according to a person familiar with the matter.
The inquiries are preliminary and the agency hasn’t opened a formal investigation, according to the person, who asked not to be named discussing a confidential matter.
Microsoft didn’t report the transaction to the agency because the investment in OpenAI doesn’t amount to control of the company under US law, the person said. OpenAI is a non-profit and acquisitions of non-corporate entities aren’t reported under US merger law, regardless of value. Agency officials are analyzing the situation and assessing what its options are.
An FTC spokesperson declined to comment. Microsoft didn’t immediately respond to a request for comment.
The UK’s Competition and Markets Authority is also gathering information from stakeholders to determine whether the collaboration between the two firms threatens competition in the UK, home of Google’s AI research lab Deepmind. The agency is taking comments until Jan. 3 before making a decision on a formal investigation.
Microsoft has invested some $13 billion in OpenAI and integrated its products into its core businesses, quickly becoming the undisputed leader of AI among big tech firms and forcing Alphabet Inc.’s Google to scramble to catch up.
FTC Chair Lina Khan has been vocal about concerns raised by AI technology and the agency is already scrutinizing some aspects. It has opened a consumer protection probe into into OpenAI, questioning whether its popular ChatGPT conversational AI bot puts consumers’ reputations and data at risk.
That probe into the Microsoft-backed startup marked the first official inquiry into a technology that has the potential to change almost every aspect of people’s lives and has become almost equally fascinating for its potential to run awry.
Earlier: OpenAI’s ChatGPT Bot Probed by FTC Over Consumer Harms
Khan has said enforcers “need to be vigilant early” with transformative tools like artificial intelligence.
Khan also has Microsoft’s growth in her sights. She’s continuing the agency’s challenge of the company’s $69 billion acquisition of video game company Activision Blizzard Inc., which the agency is fighting on appeal.
The firing — and subsequent rehiring — of Sam Altman as chief of OpenAI last month exposed how closely tied the two companies have become. Microsoft shares fell as much as 2.4% immediately after OpenAI’s board ousted Altman. Microsoft chief executive officer Satya Nadella personally helped negotiate and advocate for his return to the company — at one point offering to hire Altman himself, along with other employees at OpenAI who wanted to leave.
The move by the UK raises the question of whether antitrust regulators in other regions, namely the European Union and the US, will launch similar probes. When asked to comment on the CMA’s move, a European Commission spokesperson said the regulator had been “following the situation of control over OpenAI very closely.”
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