The FTC to investigate Microsoft’s OpenAI investment

After Microsoft seized the opportunity to invest $13 billion into the ChatGPT parent company OpenAI, alarm bells rang for Google and other tech firms. It was first believed that Microsoft’s ownership of OpenAI could give the Redmond firm a substantial competitive advantage over competitors. Now that the initial excitement around ChatGPT has settled, regulators are prompted to investigate Microsoft’s investment in OpenAI.

As Engadget (via Bloomberg) reports, the Federal Trade Commission (FTC) is investigating Microsoft’s $13 billion in OpenAI. The FTC wants to see if the deal has violated US antitrust laws. The agency is worried that Microsoft might use OpenAI’s tech to expand its dominance in the market and abuse competition.

While the FTC hasn’t yet launched an official probe into the deal, the FTC Chair Lina Khan and Microsoft are reportedly analyzing the situation and evaluating the available options. The FTC investigation is complicated because OpenAI is registered as a non-profit entity. And the law doesn’t require transactions made by such entities to be reported.

Another obstacle in the FTC probe is that according to the laws, Microsoft is not fully in charge of OpenAI, despite its $13 billion investment in the AI startup. However, the recent OpenAI controversy that resulted in the ousting of Sam Altman as CEO and then Microsoft’s interference in bringing Altman back to his position might be a trump card for FTC to trap Microsoft.

UK regulator is also investigating the Microsoft-OpenAI deal

According to Reuters, the Microsoft and OpenAI deal also caught the eyes of the UK’s Competition and Markets Authority (CMA). The agency announced on Friday that it’s looking into the deal to check whether it harms competition. “There have recently been a number of developments in the governance of OpenAI, some of which involved Microsoft,” CMA noted.

Following OpenAI’s internal battle, Microsoft was given a non-voting observer position. This means Microsoft representatives can attend to OpenAI deals and access information. However, they can’t vote on the company’s matters. While Microsoft’s role in OpenAI seems undeniable, a company’s spokesperson said they do not “own any portion” of OpenAI and just benefit from the profits.

Microsoft already had a face-off with the FTC and the UK’s CMA over the $69 billion acquisition of Activision Blizzard. The three parties finally reached an agreement, and Microsoft completed acquiring the game maker. It remains to be seen how the new encounter will end.