EU investigates Microsoft’s investment in OpenAI

The EU, which is racing to regulate the fast-growing world of artificial intelligence, said on Tuesday it had launched a preliminary investigation into Microsoft’s multibillion-dollar investment in ChatGPT developer OpenAI to see if it could be a stealth merger.

The early-stage review “checks whether Microsoft’s investment in OpenAI may be subject to review under the EU Merger Regulation,” the European Commission said.

The move is part of Brussels’ efforts to ensure its regulatory oversight can catch up with AI developments and stop major players from foreclosing on rivals in an area promising upheaval across multiple sectors.

EU competition chief Margrethe Vestager, who will meet top tech bosses in California this week, said it was “fundamental that these new markets remain competitive”.

“We invite businesses and experts to tell us about any competition issues they may perceive in these industries, while closely monitoring AI partnerships to ensure they do not unduly distort market dynamics,” she said.

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Along with meetings with Apple chief Tim Cook and Google chief Sundar Pichai, Vestager is also set to hold talks with OpenAI’s head of technology and strategy.

The November 2023 launch of the ChatGPT chatbot – at the time the fastest-adopting app in the world – marked the popular arrival of the AI ​​revolution.

Microsoft invested about $13 billion in OpenAI last year and was given a non-voting observer board seat after a failed boardroom coup against CEO Sam Altman, whom it supported and even briefly hired.

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Britain’s competition watchdog last month also said it was investigating whether the partnership between Microsoft and OpenAI resembled a merger.

Generative AI can produce text, images and audio that are often indistinguishable from those created by humans by being trained on vast amounts of data, giving it many examples that allow it to reproduce the same patterns when prompted to do so .

Its use is expected to infuse and expand – or even upend – many sectors, including legal services, business consultancy, artistic and journalistic production, design, customer relations, transport and education.

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As people engage with generative AI’s abilities to write essays and create digital art, companies are already turning to it in an effort to boost production and competitiveness.

The United States is believed to be leading the curve, with China following.

Europe has ambitions to breed its own AI champions, such as Germany’s Aleph Alpha and France’s Mistral AI.

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But the huge financial investment needed to develop AI at scale required regulators who worried that deep-pocketed corporations like Microsoft, Google owner Alphabet, Facebook parent Meta and China’s Baidu could scoop up startups.

Venture capital investment in the European Union’s artificial intelligence sector was estimated at more than 7.2 billion euros ($7.9 billion) last year – but much more is needed to increase computing power and cloud capacity.

In December, the EU reached agreement on a legislative text that, once adopted, aims to limit the potential for misuse of artificial intelligence – such as for biometric surveillance and behavioral manipulation – while encouraging innovation.

Brussels views the bill as a possible legal template for regulation in other parts of the world.

The United States already has a presidential executive order on AI safety standards, while China has implemented a law specifically regulating generative AI.

The EU legislation would add to a regulatory arsenal that already includes a Digital Markets Act that tackles anti-competitive practices by online giants.

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