The European Union is ramping up its scrutiny of the artificial intelligence (AI) industry, with a particular focus on Microsoft’s partnership with OpenAI. Last year, the European Commission began reviewing the deal to determine if it violated EU merger rules. Although the commission dropped the investigation after concluding that Microsoft did not gain control of OpenAI, Margrethe Vestager, the commission’s executive vice-president for competition policy, expressed concerns that such partnerships could result in one partner exerting a controlling influence over the other.
To address these concerns, the commission is taking a different approach by using the EU’s antitrust rules. This will allow regulators to investigate any potentially abusive behavior by companies that have a dominant market position. In March, the commission sent information requests to major AI players, including Microsoft, Google, Facebook, and TikTok. Having reviewed their responses, the commission is now sending a follow-up request for information specifically regarding the agreement between Microsoft and OpenAI. The aim is to assess whether any exclusivity clauses in the deal could negatively impact competitors in the industry.
A spokesperson for Microsoft welcomed the commission’s review and highlighted the conclusion that Microsoft’s investment and partnership with OpenAI does not grant it control over the company. Microsoft is prepared to address any additional questions the commission may have. OpenAI has not yet provided a comment on the matter.
The increased scrutiny from the European Union emphasizes its role as a pioneer in the global effort to regulate big tech companies, including those operating in the AI sector. The EU has taken the lead with its AI Act, the first comprehensive set of regulations for AI, which is set to take effect soon. Vestager also mentioned the commission’s concerns regarding consumer choices for foundation models, which underpin generative AI systems like chatbots. Google’s arrangement with Samsung to pre-install Gemini Nano on some devices has prompted the regulators to inquire into its effects. The EU has other ongoing antitrust investigations into various practices in AI-related markets.
In addition to examining partnerships, the commission is also scrutinizing “acqui-hires,” where a company acquires another primarily for its talent. For instance, Microsoft’s hiring of Inflection AI’s founder Mustafa Suleyman and other top staff is currently being evaluated by the commission. Vestager stressed the importance of preventing such practices from circumventing merger control rules and resulting in excessive consolidation.
The EU’s intensified scrutiny of the AI industry and Microsoft’s partnership with OpenAI reflects the bloc’s commitment to ensuring fair competition and protecting consumer interests. By leveraging antitrust rules and conducting in-depth investigations, the European Commission aims to maintain a level playing field in the AI sector. As the EU continues to prioritize the regulation of big tech, it is setting an example for the rest of the world and shaping the future of AI governance.
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