The US Department of Justice (DOJ) and the Federal Trade Commission (FTC) are reportedly in a bit of a power struggle over who gets to investigate OpenAI on potential antitrust grounds related to its partnership with Microsoft.
According to Politico, both agencies are eager to investigate the deal, notably Microsoft’s involvement and its impact on competition in the AI industry. However, neither will give up jurisdiction, creating a roadblock to a formal investigation.
At the heart of the matter is Microsoft’s significant investment in OpenAI. Microsoft, which first invested money in OpenAI in 2019, has continued to pour money into the company over the years. Microsoft also integrated OpenAI’s services, such as Bing and Office, into its products.
On the other hand, in an interview, OpenAI CEO Sam Altman stated that the company’s partnership with Microsoft is solid. And he hopes that Microsoft will continue to invest in OpenAI. However, this raises concerns about unfair advantages for both companies, especially in large language models (LLMs).
In the past, the FTC and DOJ have avoided overlapping investigations to maintain harmony. In 2019, they reached a handshake agreement to split up the tech giants for antitrust investigations—Facebook and Amazon to the FTC, Google and Apple to the DOJ.
Recently, the FTC investigated Microsoft’s Activision-Blizzard acquisition but agreed not to leverage it in future jurisdictional negotiations.
Politico reached out to Microsoft for comment on the partnership, but a spokesperson declined and pointed to a December statement from Microsoft President Brad Smith.
Since 2019, we’ve forged a partnership with OpenAI that has fostered more AI innovation and competition, while preserving independence for both companies. 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. We will work closely with the CMA to provide all the information it needs.
Meanwhile, the Microsoft-OpenAI partnership is under scrutiny in the US and by European and UK authorities. In December 2023, the CMA said it was “providing an early opportunity for the parties and interested third parties” to submit comments to the regulator on whether the Microsoft-OpenAI partnership “has given rise to a relevant merger situation.”