Microsoft’s $13B OpenAI Deal Gets UK Approval as US Antitrust Battle Continues

Key Takeaways

• The U.K.’s Competition and Markets Authority has decided not to proceed with an inquiry into Microsoft’s relationship with OpenAI.
• The regulator was looking into whether the deal may breach merger rules.
• In the U.S., an ongoing FTC probe could also examine the relationship between the two companies.

In 2019, Microsoft’s unusual licensing agreement with OpenAI sparked antitrust concerns around the world, with critics arguing that the deal amounted to a backdoor merger.

In the first major victory for the two companies, the U.K.’s Competition and Markets Authority (CMA) has decided not to pursue a merger inquiry. However, antitrust investigations in the U.S. remain ongoing.

U.K. Competition Watchdog Won’t Pursue Merger Probe

In December 2023, the CMA announced it was: “considering whether it is or may be the case that Microsoft’s partnership with OpenAI, or any changes thereto, has resulted in the creation of a relevant merger situation” under the Enterprise Act 2002.

After receiving comments from interested parties, the watchdog opened a probe on Wednesday, March 4. The next day, it reached its decision .

The CMA acknowledged that the relationship between the two companies is “complex” and has expanded in scope as Microsoft has increased its investment.

However, the regulator ultimately determined that Microsoft does not have the “de facto control” over OpenAI needed to justify moving ahead with a formal merger inquiry.

The decision follows a similar one by EU regulators, who also opened preliminary investigations but decided not to pursue the matter.

Antitrust Concerns Still Alive

Although the question of whether Microsoft’s investment in OpenAI is really a takeover in disguise has now been resolved, regulators still have other antitrust concerns.

Given Microsoft’s dominant position in the software market, the Big Tech firm has long been the subject of regulatory scrutiny. And authorities may investigate whether the deal with OpenAI allows it to abuse its position.

In November 2024, the U.S. Federal Trade Commission (FTC) opened a broad antitrust investigation into Microsoft focused on its software licensing and cloud computing businesses.

According to a source cited by Reuters , that probe will consider AI products, potentially bringing the relationship with OpenAI under close scrutiny.

Meanwhile, EU authorities have also suggested grounds for investigating OpenAI’s arrangement with Apple.

Microsoft and OpenAI Drifting Apart

While the FTC probe may consider Microsoft’s licensing arrangement with OpenAI, there are indications the two companies are drifting apart.

In July 2024, Microsoft gave up its seat on OpenAI’s board, where it had served as a non-voting observer.

Microsoft originally took a seat on the board of OpenAI in November 2023 amid the controversy surrounding the departure and subsequent reinstatement of CEO Sam Altman.

Microsoft said : “Over the past eight months we have witnessed significant progress by the newly formed board and are confident in the company’s direction. Given all of this we no longer believe our limited role as an observer is necessary.”

Another sign of the two companies moving apart can be seen in changes to their commercial partnership.

Until recently, Microsoft held the exclusive right to provide OpenAI’s cloud services. However, Microsoft relinquished that arrangement to allow OpenAI to enter into a joint venture with Oracle and SoftBank.

The termination of Microsoft’s exclusive cloud contract with OpenAI points to a future in which the two companies operate more independently.

In 2030, an agreement that grants Microsoft exclusive access to OpenAI’s AI models will also end, severing the strongest connection between the two firms.