Microsoft and OpenAI are under antitrust investigations in the U.S. and EU due to their close partnership.

In a recent SEC filing, Microsoft presents its relationship with OpenAI as a mix of cooperation and competition, akin to “frenemies.” This distinction comes from a form 10-K, a periodic report detailing Microsoft’s financial performance and condition, submitted in July.

Strategic Competitors

Microsoft identifies OpenAI as a rival in several sections of the report, yet frequently refers to OpenAI as a “strategic partner” throughout the document.

The filing highlights the intense competition Microsoft faces across various markets, listing numerous companies, including Apple and Nintendo, among its competitors. Despite this broad list, OpenAI is the only entity specifically named as a strategic partner.

A quick review of the filing shows 72 mentions of “partner,” including terms like “partnership” and their plurals. However, no other specific partners are named aside from OpenAI. Most mentions refer generically to “Microsoft partners” or “our partnerships.”

This might not hold legal significance but is notable as both OpenAI and Microsoft are facing antitrust scrutiny in the UK, U.S., and EU concerning their strategic relationship.

Rival Partners

Microsoft and OpenAI’s relationship exhibits characteristics of a significant tech acquisition, though without an actual buyout.

In July 2019, Microsoft invested $1 billion in OpenAI, becoming its exclusive cloud provider, which effectively granted Microsoft hosting rights for ChatGPT before its public release.

After ChatGPT’s launch, Microsoft invested an additional $10 billion, securing early and semi-exclusive access to integrate GPT-4 into its “Copilot” and “Bing” services, while also enhancing OpenAI’s offerings.

In 2023, OpenAI went through a leadership shakeup that briefly removed CEO and cofounder Sam Altman and altered its board of directors. During this upheaval, Microsoft expressed willingness to hire Altman and other departing OpenAI employees, offering them a new division within Microsoft.

Altman eventually returned as CEO, and the board was restructured to include a Microsoft observer seat. However, by July 2024, Microsoft relinquished this seat, stating it was no longer necessary.

Regulatory Scrutiny

Amid these developments, antitrust investigations have intensified. The UK and EU launched probes in late 2023 and early 2024. By June 2024, the U.S. Justice Department and the Federal Trade Commission began formal inquiries into Microsoft, Nvidia, and OpenAI regarding potential dominance in the AI industry.

While antitrust investigations are common for large tech companies, it is significant that Microsoft portrays its unique relationship with OpenAI as typical competitive collaboration.

Source: Cointelegraph