The European Union has launched a high-stakes investigation into agreements struck between tech giants and generative AI developers, with a sharp focus on the alliance between Microsoft and OpenAI.
This inquiry, spearheaded by the European Commission, aims to scrutinize the competitive landscape with rising industries like virtual worlds and generative artificial intelligence (via CNBC).
SAN FRANCISCO, CALIFORNIA - NOVEMBER 06: Microsoft CEO Satya Nadella speaks during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. OpenAI CEO Sam Altman delivered the keynote address at the first ever Open AI DevDay conference.
EU to Look Into Multibillion OpenAI-Microsoft Partnership
The investigation seems to focus on the partnership between Microsoft and OpenAI, which involved a significant investment from Microsoft.
The Commission assesses whether this investment aligns with the EU Merger Regulation, signaling potential challenges for Microsoft's strategic collaboration with OpenAI.
Microsoft's involvement with OpenAI dates back to 2019 when the tech giant injected $1 billion in cash, and it made headlines again in the past year with an additional reported investment of $10 billion, bringing the total to a staggering $13 billion.
This investment allowed for the incorporation of advanced AI technologies into various Microsoft products, such as Office, Bing, and Windows.
Nevertheless, the onset of this powerful partnership has raised worries about the possibility of Microsoft having too much influence and control over OpenAI's operations.
This EU investigation comes after the UK's Competition and Markets Authority (CMA) conducted similar inquiries, and there were reports of the US Federal Trade Commission's involvement.
Both organizations have shown a strong interest in analyzing the impact of this significant partnership on market dynamics. In response, Microsoft emphasized its non-equity ownership in OpenAI, asserting that it only holds a share of profit distributions.
EU to Probe Emerging Disruptive Industries
At the heart of the matter lies the European Commission's initiative to ensure that these burgeoning markets remain competitive and open for innovation.
The Commission has issued calls for contributions from stakeholders, inviting insights and feedback on the level of competition in virtual worlds and generative AI. This open invitation extends to suggestions on how competition law can be wielded to preserve competitiveness in these nascent yet disruptive domains.
EU officials have clarified that their investigation is not solely fixated on the Microsoft-OpenAI pact. It encompasses a wider net, encompassing agreements inked between major digital players and AI developers, aiming to unravel the impact of these partnerships on market dynamics.
OpenAI's ChatGPT
OpenAI, the company behind ChatGPT and the recently rumored GPT-4 with human-level performance, experienced internal turmoil earlier this year, including the departure and subsequent return of CEO Sam Altman.
The EU's investigation, however, is not limited to the said companies; it is part of a larger effort to navigate the challenges posed by disruptive technologies such as generative AI and virtual worlds.
The Commission notes that these innovative landscapes, characterized by persistent, immersive environments (virtual worlds) and AI systems capable of creating synthetic content (generative AI), are expected to grow exponentially and significantly impact competitive business landscapes.
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